Candy Crush Going Public, Because Candy Crush Will Always Be Popular

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Sam Biddle

02/18/14 10:30AM

Filed to: bubblicious

If there's one truism on the internet, it's that once something is well-liked and popular, it remains in that state forever. This is the rationale behind King Digital, the firm behind Candy Crush Saga and, uh, maybe some other things (?) to announce its IPO.

All those times you were too impatient to beat a Candy Crush level yourself and paid a buck for a super sprinkle have given these goons the chutzpah to go public. The Wall Street Journal has details on the filing:

King estimated in its filing Tuesday that its shares were worth $45.61 as of December, which valued the company at about $5.5 billion at the time, based on the number of shares outstanding at the time. That valuation doesn't include, among other things, the value of new shares likely to be created for the IPO. King is likely to seek a stock market value greater than that in the IPO, a person familiar with the matter said.

That would be a significantly higher IPO price than Facebook, for a company whose entire existence is based on a fruit-swapping puzzle game. Matty Yglesias over at Slate rightly calls it an "IPO for suckers," betting that this is "a case of founders and early investors trying to cash out while Candy Crush is still popular." And indeed, per the Journal, "The company intends to allow some of its shareholders to sell into the IPO as well, according to the filing." This is a delicious, choco-creme emergency exit for people who know their sugar rush won't last forever.

But what about the suckers left holding the shares? We don't have to ask, sarcastically, what could go wrong, because it has already gone wrong before.

The following replies are approved. To see additional replies that are pending approval, click Show Pending. Warning: These may contain graphic material.

1

AlexOsadzinski Sam Biddle 02/18/14 12:12PM

While I, too, can only roll my eyes at the concept of a Candy Crush IPO, I did want to pedantically opine about the share price. I know that you know this, but the value of a company is the share price * number of shares outstanding. Those who don't know this often miss some very important nuances about value, e.g. just because some early investors bought shares in a company at, say, $2, and the stock is trading now at $20, it doesn't mean that they made 10 times their money. It's possible, even likely, that the stock split a bunch of times, so the early investors have, say, 10 times as many shares, and effectively paid $0.20 per share, and so made 100 times their money back.

So Candy Crush's stock price being more than Facebook's is irrelevant. It's the total market cap (price*shares) that counts.

JimZ AlexOsadzinski 02/19/14 06:03AM

So in other words, the "value" of a company is more or less complete fiction.

AlexOsadzinski JimZ 02/19/14 08:34AM

No, not at all. The value of anything is what someone is willing to pay for it. When someone says "my house is worth $300,000", but they can only sell it for $280,000, then its real value was $280,000.

The value of a public company is the current share price (determined by the most recent transaction(s)) multiplied by the number of shares outstanding.

That value usually comprises the cash and equivalents that it has on hand, the amounts owed to it by customers who haven't paid it yet minus the amounts it owes to suppliers, tax authorities and the like, plus a less tangible value placed upon it by shareholders based on their belief in the company's future prospects for revenue and profit, what they think the brand is worth, and the like.

The fact that a share price can fluctuate dramatically day to day is weird, but reflects changing confidence by the shareholders in the company's prospects.

If a company does a stock split, e.g. give every shareholder one extra share for every share that (s)he already owns, the price of each share typically halves, and the value of the company remains the same. Some companies do it for "optics" (i.e. at least partially bullshit) so that the shares don't seem too "expensive". Some do reverse splits, i.e. give you one share to replace the two you previously had, and the price more-or-less doubles. This is often a bad sign, because they don't want the stock to look too "cheap".

1

Rob O. Sam Biddle 02/18/14 10:43AM

I never played this garbage. I know people who play it religiously though. And tell me about it. And I don't care, but I'm polite enough to nod and smile.

1

The Gray Adder Rob O. 02/18/14 11:30AM

I played it for awhile, refused to pay for extras, and made it to level 200-something before getting tired of it. The thing is, there is no real strategy. None. You play and play until you get lucky, or until the game algorithm senses you're about to get tired of this shit and quit.

I have even been offered powerups that would have been utterly useless in completing the level I just failed 10 or 15 times.

And now they have a prize wheel you can spin and get a powerup for free every day. That's how I know people are already getting tired of Candy Crush Saga pressing their emotional buttons for cash. I can think of several utterly useless things that would probably make better investments than this stock, pogs, Pokemon cards (my son has a German-language foil Charizard somewhere in his room he'd sell you fairly cheap), 9/11 memorabilia (as seen on TV), pennies with JFK's face engraved on them (yeah, I'm that old), any number of things. Pass.

1

ScottieBinyons The Gray Adder 02/18/14 02:11PM

You notice that too, huh? Like if you tried X amount of times, didn't play for awhile and went back to it and suddenly the damn thing would explode and get you past whatever level was holding you up? It must be designed that way; see if people will spend money to advance, push just long enough and if they respond negatively, guarentee that the next time they play, they will not lose and move on.

3

Arturo Sam Biddle 02/18/14 10:42AM

What could possibly go wrong?

Alexander_Crouton-Skitch Arturo 02/18/14 11:05AM

And if you'll notice — he has no teeth. Too much candy.

1

JimZ Sam Biddle 02/18/14 11:58AM

I have to echo what someone else said on another article here... FIAT ended up paying about $6 billion for Chrysler- a company which makes things people need, has tens of thousands of employees and $billions in assets worldwide- and somehow we're to believe King Digital is worth as much or more than that based on one game?

what happens when people get bored with "Candy Crush" and King can't follow up with another smash? How many Zyngas do we need before people get it through their heads that fads are not things you invest in?