{"id":48822,"date":"2014-03-21T19:03:01","date_gmt":"2014-03-21T23:03:01","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=48822"},"modified":"2014-03-23T21:10:31","modified_gmt":"2014-03-24T01:10:31","slug":"investors-go-crazy-for-the-candy-crush-ipo-but-should-you","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/03\/21\/investors-go-crazy-for-the-candy-crush-ipo-but-should-you\/","title":{"rendered":"Investors Go Crazy For the Candy Crush IPO \u2014 But Should You?"},"content":{"rendered":"

By MoneyMorning.com.au<\/u><\/a><\/p>\n

Another day, another crazy internet IPO<\/strong>.<\/p>\n

Following Facebook and Twitter\u2019s successful floats, King Digital Entertainment has also joined the IPO party. It\u2019s the maker of Candy Crush Saga<\/strong><\/em>, and it\u2019s expected to be valued at $US7.6 billion when it goes public this month.<\/p>\n

For the uninitiated, Candy Crush Saga <\/em>is a free mobile app that requires the player to push together matching coloured candy into lines of three.<\/p>\n

Apparently it\u2019s addictive, and has some impressive numbers behind it.<\/p>\n

Since launching in April 2012 it\u2019s been downloaded over 500 million times. And it has generated revenue of US$602 million in the fourth quarter of 2013 for King. That\u2019s up from US$22 million in the first quarter of 2012.<\/p>\n

That\u2019s big revenue growth, sure, but it\u2019s mostly due to Candy Crush<\/em> downloads. King makes around 180 other games which don\u2019t even come close to the popularity of Candy Crush<\/em>. <\/p>\n

Can Candy Crush sustain it’s growth?<\/h2>\n<\/p>\n

The mobile game app is a big market \u2014 estimated at US$17 Billion.<\/p>\n

But it\u2019s unlikely Candy Crush<\/em> will be able to sustain its growth.<\/p>\n

Games are essentially a single-use products. While other tech companies can expand their platforms \u2014 think of the new features Facebook constantly adds \u2014 games remain mostly the same.<\/p>\n

That\u2019s fine if the product in question is one you need, or one it does a better job than your competitors.<\/p>\n

But there are literally hundreds of millions of digital games on the market, each there to tempt bored commuters or lazy office workers. <\/p>\n

And it seems unlikely that Candy Crush<\/em> will remain the game of choice. In fact, odds are that another fad will sweep the game away.<\/p>\n

Fads of the past show Candy Crush IPO is overrated<\/h2>\n<\/p>\n

How can we be so sure?<\/p>\n

Well, other popular games have come and gone.<\/p>\n

Farmville for example was once the \u2018addictive\u2019 game of the moment.<\/p>\n

In a similar flurry of insanity the company behind the hit Facebook game was valued at US$7 billion when it started trading on the stock market in 2011. At the time, that was the biggest internet IPO since Google. <\/p>\n

But guess what? Farmville\u2019s popularity waned and its stock price has since halved.<\/p>\n

You\u2019d think that would cool the excitement surrounding the <em>Candy Crush<\/em> IPO<\/strong>.<\/p>\n

But no, it hasn\u2019t. <\/p>\n

Instead, investors are smacking their lips. Are they crazy? Possibly, but no more crazy than other tech investors<\/a> of late.<\/p>\n

And King has one thing many other tech companies <\/a>don\u2019t: an ability to turn a profit.<\/p>\n

Making a profit before tax of US$714.3 million last year, King stands out among other tech firms that have popular products, but no way of making money. <\/p>\n

Still, the company seems massively overvalued considering how fickle our tastes in online gaming are. Maybe Wall Street traders are just looking for an excuse to play Candy Crush<\/em> in the office? <\/p>\n

Callum Denness
\nContributing Editor, Money Morning<\/em><\/strong>
\nJoin Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au Another day, another crazy internet IPO. Following Facebook and Twitter\u2019s successful floats, King Digital Entertainment has also joined the IPO party. It\u2019s the maker of Candy Crush Saga, and it\u2019s expected to be valued at $US7.6 billion when it goes public this month. For the uninitiated, Candy Crush Saga is a free mobile … <\/p>\n

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