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Candy Crush IPO price doesn't seem like a crazy valuation

Hot Stock Minute

The maker of the hugely-popular mobile game Candy Crush Saga is looking for sweet returns from its initial public offering expected later this month. King Digital Entertainment expects to be worth $7.6 billion based on a share price between $21 and $24 dollars. The company plans to list its shares on the New York Stock Exchange under the ticker: KING.

The Irish company is hoping to capitalize on a hot IPO market so far this year and momentum from recent offerings such as Twitter and Facebook, both of which have seen strong gains since their debuts.

Yahoo Finance Editor-in-Chief Aaron Task told Hot Stock Minute this morning that his initial reaction to the planned IPO and the valuation was that the market was getting way ahead of itself, but on closer inspection the valuation is not that high relative to the overall market and technology stocks, in particular. “Think about the valuation on WhatsApp at $19 billion with no revenue?” asked Task. “King Entertainment is a profitable company. They had about $2 billion in revenue last year.”

Candy Crush Saga, which was the most-downloaded free app of 2013, requires players to line up candies of the same color. The game has been downloaded more than 500 million times since its launch in 2012.

Task believes the IPO price range is a vote of confidence from Wall Street based on Candy Crush and some of King’s smaller hits, but he says the valuation also means Wall Street wants to see what’s next in the pipeline. “It doesn’t seem like a crazy valuation, at least on the surface,” said Task. “I think people who get in on the IPO are going to be very happy on the first day of trading.”

The offering is scheduled to be priced on March 25th and the stock will start trading on March 26th, according to Reuters’ sources.