Updated, 7:54 a.m. |
The company that brought the world the addictive puzzle game Candy Crush Saga is hoping that investors will line up for a piece of its stock as well.
King Digital Entertainment, which is headquartered in Dublin but has offices across Europe and in San Francisco, filed on Tuesday for an initial public offering in the United States. But prospective investors may be wary that players may be tiring of paying to line up shiny virtual pieces of sugar.
While King’s preliminary prospectus gave a preliminary $500 million fund-raising target to determine registration fees, the company is expected to seek a multibillion-dollar valuation.
King is the latest in a growing number of European social gaming companies that have become global champions.
Supercell, the Finnish tech start-up behind the Clash of Clans and Hay Day franchises, raised $1.5 billion last year from the Japanese telecommunications company Softbank, in a deal that valued Supercell at around $3 billion.
Other European gaming companies include Wooga, a Berlin-based start-up that has created a series of social gaming hits like Jelly Splash that continue to top the charts on both Apple’s iTunes and Google Play’s stores.
The rise of the nearly 11-year-old King, built largely on the huge success of Candy Crush, has had many analysts and prospective investors eagerly await an I.P.O. The company said that its profit surged more than 7,000 percent last year, to $567.6 million from $7.8 million. Revenues climbed tenfold, to nearly $1.9 billion.
In its filing, the game maker disclosed that it has 128 million daily active users, some of whom spend big amounts of money to buy lives or special tools.
Candy Crush, in which players try to line up three or more matching types of candy, contributed the vast majority of that number with an average of 93 million users a day. It remains the second-highest-grossing app on Apple’s App Store as of Tuesday, behind Clash of Clans.
Other popular games include Pet Rescue Saga and Farm Heroes Saga.
Despite the rapid successes of these European companies, analysts and investors fret that the gaming start-ups remain reliant on a small number of hits.
American rivals like Zynga, which went public in an I.P.O. in 2011, have seen their share prices slump, as investors raise concerns that they will not be able to create new gaming franchises that will keep consumers entertained.
Some investors may be concerned that King could suffer the same fate. The company said that its top three games comprised 95 percent of its total gross bookings.
The company’s gross bookings and revenues declined in the fourth quarter of 2013, in part because of a decline in the Candy Crush business. King emphasized that it expects its blockbuster hit to contribute less to its overall sales over time.
JPMorgan Chase, Credit Suisse and Bank of America Merrill Lynch are leading the underwriting of the I.P.O.
