King.com priced its initial public offering on Tuesday at the mid-point of its expected range, valuing the “Candy Crush Saga” maker at about $7.1 billion despite questions about whether it can replicate the success of its smartphone smash-hit.
The offering marks the largest United States IPO from a booming mobile gaming industry that has been keen to emerge from the shadow of Zynga Inc, the social gaming firm that lost half its value after a 2011 IPO that valued it just below King at $7 billion.
London-based King priced its IPO at $22.50 per share, with the stock to debut on the New York Stock Exchange on Wednesday. Its offering of 22.2 million shares would raise about $500 million at that price.
“It’s fair to say that if it was a very high-demand IPO, we would’ve seen the price at the upper end of the range,” Sterne Agee analyst Arvind Bhatia said. “At the mid-point, it’s a successful IPO but perhaps not a runaway success.”
Even if King, whose other games include “Bubble Witch Saga” and “Papa Pear Saga”, pulls off a strong debut, the real test will be the stock’s staying power in coming weeks and months. King hopes to avoid Zynga’s fate by virtue of a stronger focus on a mobile gaming market worth an estimated $17 billion.
“What’s more important than the price is how it trades tomorrow and in coming sessions,” Bhatia said. “If the investors are in because they expect a quick profit and it doesn’t happen because it doesn’t get a lift, people will exit quickly.”
Founded in Sweden in 2003, the company has drawn plaudits for transforming “Candy Crush Saga” into a household name that was the most downloaded and top-grossing free app of 2013 on Apple Inc’s app store.