Thursday, March 27, 2014

Candy Crush IPO

Everytime a company IPOs and the shareprice pops on the first day, the press has articles about how great the company is, and there are a slew of contrarian pieces saying how pops just mean the company was underpriced and leaving money on the table, and this amounts to a kickback to unscrupulus bankers who gave their favored clients a sweetheart deal.

Well, the King IPO tanked in that it closed down 15% or so from their IPO, and I suppose this may be a contrarian piece saying the King guys are geniuses because they didn't leave any money on the table, but my real question is why the company went public at all.

The Tech Bubble, if there is one, is certainly a Bubble 2.0 as it is primarily occurring in the private market via inflated seed rounds and extremely rich acquisitions, such as the recent Facebook purchase of Oculus, and you can add Nest, Instagram, and WhatsApp to that list. King is a curious inverse, as it's the perfect company to keep private as a cash cow with a limited time horizon, but instead they go to the public markets for even more liquidity?

The entertainment business and shareholders do not mix well, and I'm thrilled to see financing vehicles like Kickstarter for projects which are worthy, but would never get funded otherwise. I would love to learn the insider story for why King decided to IPO at all.


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