Candy Crush Maker King Digital Makes a Rocky Landing on the NYSE
After much fanfare and anticipation, the initial public offering of King Digital Entertainment (NYSE:KING) is here. Shares began trading on the New York Stock Exchange on Wednesday morning at $20.50, down about 8.9 percent from a $22.50 IPO price, and fell as low as $18.90 during the trading day. The trading day finished at $19.
The price action is somewhat anticlimactic, but also not necessarily surprising. It’s somewhat anticlimactic because King Digital entered a particularly fertile IPO market and was ostensibly set to capitalize on momentum for tech and Internet IPOs in general. According to CB Insights, the amount of investment dollars pouring into tech IPOs has increased fairly dramatically over the past few years, and dollar volume growth has outpaced IPO volume growth. Twitter’s (NYSE:TWTR) frenetic IPO is pretty much a symbol of this euphoria and the type of company that can capitalize on it.
King Digital is no Twitter, but it occupies a similar niche in the spectrum of investments. It is relatively small, new company; it anticipates rapid growth; it threatens to disrupt and lead a market; and it deals with mobile tech and social media, which are like the Wild West right now — basically, it’s a siren. King Digital, like Twitter and any number of tech and Internet IPOs over the past few years, is tempting investors into the rocks with the promise of outsized returns.