The most highly valued British company to emerge from the technology boom, King Digital Entertainment, endured a torrid stockmarket debut in New York yesterday as shares fell 12.6% in early trading.
The London-based studio behind the Candy Crush mobile gaming phenomenon sold shares to investors at $22.50 (£13.60) on Tuesday, but traders immediately marked down the stock when it reached the open market by setting an opening price of $20.50 on the New York Stock Exchange.
The stock continued to fall during the opening hours, hitting $19.67, with concerns that King could suffer the same fate as rival games developer Zynga, whose shares are currently worth half their 2011 float price.
"Investors are clearly finding the price tag a little high for a company that relies on most of its revenue from one albeit popular game," said analyst Jasper Lawler at CMC Markets.
The seven underwriting banks – JP Morgan, Credit Suisse, BofA Merrill Lynch, Barclays, Deutsche Bank, and RBC Capital Markets – were expected to rush to King's defence by buying up shares to prop up the price, in a tussle with speculators that will continue until the closing bell.
King and its backers raised nearly $500m on Tuesday by offloading 22.2m shares, valuing King at just over $7bn, in private sales to investors arranged by the underwriting banks.
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