Dallas, Texas 04/15/2014 (FINANCIALSTRENDS) – King Digital Entertainment PLC (NYSE:KING) the maker of popular digital game Candy Crush has been struggling to retain valuation at the browsers after making its big splash entry into public trading arena on 26th March via a IPO. The Dublin, Ireland head quartered firm had priced its IPO at $22.5 per share, but debuted trading at a price lesser than the offer price. Since then it has continued to loss investors and had recorded a 10.7 percent dip in its share price post IPO.
While the fundamentals of King Digital Entertainment PLC (NYSE:KING) have not changed much from the time of its lPO issue, the market dynamics which dictate the valuation of such firms has surely changed. Hence even though King Digital Entertainment PLC (NYSE:KING) has posted net income of $567 million in the past one year and has generated sales of $1.88 billion, it is seeing acute weakness in its stock. Its key margins including gross margins, profit margins and operational margins have been showing impressive quarter on quarter growth, while its EPS has gone up by more than 3500 percent in the past quarter.
The past two week’s sell off in King Digital Entertainment PLC (NYSE:KING) stock has been part of a larger withdrawal of investments that is occurring in the tech sector. In the past one month, the technology sector as a whole has receded by 6 percent. The sell off is occurring due to concerns from the investor community that the valuations of the tech firms are much ahead of the income they are likely to generate in the first quarter results period which is just round the corner. The the fact that investors are comparing the newly launched public offerings like King Digital Entertainment PLC (NYSE:KING) alongside their well established peers to determine the valuation of their new investments, these new stock come under added pricing pressure at the markets in these volatile times.