King's share price has fallen nearly 10%

This is more 'crush' than 'candy': King may have beaten expectations in its first quarter as a public company, but shareholders aren't impressed.

by Emma Haslett
Last Updated: 13 Aug 2014

King’s decision to list in uncompromising New York is starting to look a little ill-advised: the London-based games developer may have posted results showing it made $607.6m (£358m) in revenues during in the three months to the end of March, but shares still dropped more than 9.4% in early trading, to $16.86. Day-um, as they say in the US.

MT is going to go out on a limb and suggest investors are being unfair: not only did that revenue figure beat analyst expectations of about $600m, but earnings tripled from $81.4m last year to $248.6m now.

Crucially, though, it showed it’s diversifying: in the previous quarter, Candy Crush accounted for 78% of income. Now it’s 67%. Three King Games (it doesn’t say which) were in the top 10 grossing games on the Apple App Store and Google Play Store in the US, and worldwide on Facebook, during the first quarter. That suggests it isn’t necessarily the one-hit wonder people were worried about. As Farm Heroes Saga accounted for most of the rest of the gross bookings (after Candy Crush), it turns out it’s a two-hit wonder…

To back up our assertion, several US-based underwriters have said they reckon the market undervalues King.  Cowen & Company said it’s worth a whopping $31 a share, while Eilers Research said it should be more like $19. As long as it can wean itself off that Candy Crush habit, it could happen...

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