Two underwriters tell Reuters King Digital's (KING) IPO will price on March 25, and begin trading the next day. The company is looking to raise $326M-$372M by selling 15.5M new shares, and is offering 6.7M shares on behalf of existing holders.
King's $21-$24 price range implies a valuation range of $6.7B-$7.6B, or a fairly conservative 3.4x-3.8x 2013 bookings of $1.98B. The pricing undoubtedly reflects concerns about King's heavy dependence on Candy Crush Saga (responsible for 78% of Q4 bookings and 73% of December DAUs), in spite of the popularity achieved by several of the company's other titles.
The New Yorker's James Surowiecki: "The company didn’t make eighty times more in 2013 because it had cracked a code; it just caught lightning in a bottle ... Development costs in the game-app world are very low ... As a public company, King will have to show shareholders consistent results and ever-growing profits."
Peers Zynga (ZNGA +2.4%) and Glu Mobile (GLUU +4.2%) are moving higher today. Excluding cash/investments and the impact of the pending NaturalMotion deal, Zynga, whose bookings have nosedived over the last several quarters, trades at 4.9x 2013 bookings.
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