King Digital Plunges 23% As Candy Crush Saga Runs Out Of Steam
WELL, what the stock market was worrying about has come to pass. King Digital is the maker of Candy Crush Saga, that game that’s been sucking the life out of the nation for the past couple of years. It’s also one of the great UK successes in the mobile games space. However, they’ve not been able to come up with anything to replace that now becoming ever less fashionable game: thus the stock sank like a stone:
King Digital Entertainment, the makers of mobile game Candy Crush Saga, has cut their 2014 forecast following the company’s poor performance at the New York Stock Exchange.
The company’s shares fell 22 percent to close at USD 18.20 on NYSE.
King reported a quarterly revenue of USD 594 million, compared with USD 456 million in the same period in 2013.
King Digital Entertainment achieved lower than expected results in the second-quarter. According to the company, it has previously estimated to make a turnover of USD 2.55 billion to USD 2.65 billion from the items bought within its games but it has now lowered it to USD 2.25 billion to USD 2.35 billion.
Note that it’s not making a loss or anything. It’s just not going to make as much in the future as everyone thought it was.
The background here is very similar to an earlier games company, Zynga. They had that huge hit Farmville and as that was soaring they floated on the stock market. Then, as always happens, Farmville became less popular, they didn’t have any other games to replace it and the stock is now 30% of the price at with they floated it.
This is what people worried would happen to King Digital: they floated the stock off the back of the massive success of Candy Crush Saga and people were worried that they would be a one hit wonder. Will they be able to find another hit game to replace it? They’re keeping cheerful about it but they don’t seem to have managed it yet: thus the drop in the share price.
It is, sadly, always the same. We just don’t know whether a success can be replicated but everyone seems willing to bet on it all the same.