King Digital Entertainment PLC, maker of the Candy Crush smartphone game, suffered the biggest decline of a newly listed U.S. company in more than four months even after it priced its shares at a discount to its major peers.
King’s shares dropped 16 percent to end trading at $19 Wednesday on its first day of trading.
King and shareholders Apax Partners LLP and Index Ventures raised $500 million in the IPO after pricing the stock to start at $22.50.
At the IPO price, King was valued at $7.09 billion, which made it cheaper — relative to projected sales — than publicly traded peers including Giant Interactive Group Inc. and Zynga Inc.
That had investors betting that they could profit from a quick jump in the shares once they began trading, said Jeffrey Sica of Sica Wealth Management LLC.
Instead, concern that the popularity of Candy Crush will wane is weighing on the shares, he said.
“There were a lot of people hoping for momentum off the open and that didn’t happen,” said Sica, whose firm oversees more than $1 billion in assets.
“If you don’t get momentum out of the gate you’re not going to get it, and it makes sense to cut your losses quickly rather than wait.”