Developer King Digital Entertainment priced its offering to public investors at $22.50 a share on Tuesday, but those shares have already fallen 15 percent in their New York Stock Exchange debut to a low of $19.08.
King, which develops a range of addictive games but is mostly known for its wildly popular Candy Crush Saga title, as well as its controversial attempt to trademark the word "candy", raised $500 million in its run-up to going public, valuing the firm at more than $7 billion. With that valuation, King had become one of the biggest initial public offerings in 2014.
It seems investors are not easily convinced that King is more than a one-trick pony, however. King needs to prove that it'll have continued revenue and profits, not to mention the ability to develop more than one hit video game, in order to justify its huge valuation. As of Wednesday, King's shares dipped so much that $1 billion has been shaved off its valuation, according to Reuters.
Many reports have already drawn comparisons between King and Zynga, the developer behind another hit game called Farmville. Zynga went public in 2011, with a valuation of $7 billion, but its value has also fallen extensively to just over $4 billion. This debut-then-dip pattern again suggests that investors are concerned about companies relying on one game for their bread and butter.
King launched Candy Crush Saga on Facebook in 2012, but the game quickly released for Apple and Android devices just months later. It has since been downloaded more than 500 million times and has nearly 100 million daily active users.
Roughly 75 per cent of King's revenue comes from Candy Crush Saga, even though the developer offers about 180 games in total.