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Zynga higher following King IPO filing; F-1 shows big 2013 numbers

  • Zynga (ZNGA +3.6%) is rallying after top social gaming rival KING finally filed a public F-1; the Candy Crush Saga developer is believed to have confidentially filed for an IPO last September.
  • King, which is looking to raise $500M, saw its bookings rise nearly 11x in 2013 to $1.98B, and (in spite of 30% cuts for Facebook, Apple, and Google) its net profit grow to $567.6M from a mere $7.9M The top and bottom-line figures suggest a $10B+ market cap isn't out of the question.
  • At the same time, the filing shows King remains (in spite of the popularity of a few other titles) very dependent on Candy Crush (responsible for 78% of Q4 bookings and 73% of King's 128M December daily active users) and that the game's popularity may be starting to wane. Investors with memories of Zynga's boom-bust cycle are bound to take notice.
  • King's Q4 bookings, while up nearly 9x Y/Y, fell by $16M Q/Q to $632M. Likewise, its monthly unique payers dropped 7% Q/Q to 12.2M. On the other hand, total monthly active users rose 13% Q/Q and 6x Y/Y to 408M.
  • 73% of King's Q4 bookings came from mobile, and 56% came from North America. King claims its mobile games have been installed 500M times, and were played 1B times/day in December.
Comments (9)
  • Paulo Santos
    , contributor
    Comments (17137) | Send Message
     
    KING will be another ZNGA.
    18 Feb, 11:35 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5577) | Send Message
     
    Agree with Paulo. Game developers have shown no ability to produce the next big winner so it appears almost impossible for King to exit 2014 with any growth due the inability to replace the success of Candy Crush.

     

    If anything, ZNGA has been the play for the last few months.
    18 Feb, 11:38 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17137) | Send Message
     
    But even ZNGA is a bubble here. No sense in paying up for it "just because it's ZNGA".
    18 Feb, 11:39 AM Reply Like
  • Philip Marlowe
    , contributor
    Comments (849) | Send Message
     
    I don't know why Zynga is higher. Once the king shares start trading money will move from Zynga to king, and Zynga will fall. The slight Q4 drop King showed is concerning, but King is far better positioned than the dying decaying Zynga. And if King, who had the top spot in all the rankings for most of Q4 is having problems what is one to say of Zynga, whose highest ranked game is ranked around 21.

     

    All of this shows that the mobile gaming market is very young and unpredictable and one has to be crazy to invest under the belief that past results guarantee future performance. I am sure someone will make a lot of money in mobile gaming in the near future but no-one know who that is, and it will probably be someone most of us have never heard of before.
    18 Feb, 11:42 AM Reply Like
  • Chris Lau
    , contributor
    Comments (1482) | Send Message
     
    The tide brings all stocks higher, regardless of weak business proposition.
    18 Feb, 01:07 PM Reply Like
  • AmericaStartsHere
    , contributor
    Comments (17) | Send Message
     
    King and Zynga have to complete with Flappy Bird creators. Anyone can take the top spot. These companies are constantly chasing the next big thing and paying millions in the short term. Past performance definitely does not mean future performance.
    18 Feb, 01:09 PM Reply Like
  • skippy the kangaroo..
    , contributor
    Comments (52) | Send Message
     
    its all about having a library of games ,one hit wonders are just that , more games the better for these companies ,

     

    you guys should seriously look at GLUU ,market cap of 400m , and with a arsenal of games ,they are number one in "shootem up games"

     

    they release about 3 to 5 games per quarter,

     

    with google and apple planning to release gaming console's , in direct completion to xbox and ps4 , the potential for games on the android and ios platform is getting set to explode,

     

    imagine playing deer hunter on the big screen , or clash of clans ,

     

    basically its all about "content on demand" and that's were the future is heading too,

     

    and everything becoming mobile and wireless , that's the future...
    18 Feb, 08:27 PM Reply Like
  • NWCats404
    , contributor
    Comments (223) | Send Message
     
    Concerns are valid, but ZNGA has a lot of valuable real-estate and cash. Guidance also said ZNGA will be profitable going forward. It's a gamble, but a couple of big hits can sustain a company like KING or Zynga for a year or more. In-app purchases look to be a huge revenue generator in the future too, so these companies in general may be cash cows. Rather than $60 for a game up front, it's $10 up front, and then you buy upgrades. We'll see.
    20 Feb, 01:15 PM Reply Like
  • dnorm1234
    , contributor
    Comments (688) | Send Message
     
    >In-app purchases look to be a huge revenue generator in the future too

     

    How, exactly, do you think these games are generating revenue now? Candy Crush, which is Kings's big hit and generated more than three quarters of the company's revenue, is free. I don't think ZNGA has a single game with an up front purchase price.

     

    In-app purchases has been the model for these companies for their entire existence.
    24 Feb, 08:13 AM Reply Like
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