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  • King Digital Up 15% Yesterday On Upgrades 2 comments
    Jul 1, 2014 7:59 AM | about stocks: KING

    King Digital benefited from some heavy volume Monday with more than 6.5 million shares being traded before the closing bell, well above their average of 1.3 million shares per day. The high volume resulted in a 15% gain for the mobile game developer. So what's the dealio?

    Contrary to what many investors thought, KING's IPO wasn't the end (although we had Zynga to thank for setting the bar so low). KING received two upgrades Monday, which may have been the spark that fed the flame. Doug Anmuth at JPMorgan & Chase noted that King Digital closed the first quarter with $678.2 million in cash and is forecasted to produce free cash flow of more than $800 million this year.

    That raises the possibility that the company may look to return some of that cash to investors. Anmuth's overweight rating comes with a target price of $30 by the end of the year.

    KING also recently established a partnership with China's Tencent to launch a Chinese-language version of Candy Crush this summer. With over 500 million mobile users, there's some significant growth opportunity there.

    There are also rumors that the surge was in part due to KING's competitor Glu Mobile's recent rise after releasing an iPhone game featuring Kim Kardashian (ummmm…). As interesting as that sounds, I'm just not buying it.

    All in all, I have seen some surprising things from KING since their IPO was a complete failure. Their bookings are leveling out a little in terms of where they're getting their revenue (67% came from Candy Crush in Q1 versus 78% the previous quarter), and the new China deal is sure to give them a boost to ride for a while.

    In conclusion, I believe that King Digital has been overly chastised by the market, despite their best effort to not be anything like its disappointing predecessor. At this point, I'd recommend them as a buy, at least in the short term as things continue to develop with the China launch.

    Stocks: KING
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  • KJP712
    , contributor
    Comments (437) | Send Message
     
    I agree and have added KING to my Watchlist.Good luck !
    1 Jul, 12:32 PM Reply Like
  • Anyoption
    , contributor
    Comments (218) | Send Message
     
    Author’s reply » Thanks KJP712!
    7 Jul, 06:54 PM Reply Like
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