This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Does Profit Even Matter? Investing Ideas from the Not So Secret Candy Crush IPO

Stocks in this article: CVT DATA NDLS SFM

James Dennin, Kapitall: Candy Crush maker King filed for an IPO. The company is already profitable, but will that be enough?

King Digital Entertainment is the maker of Candy Crush - the online mobile game which has turned into one of the internet's fattest cash cows. And this morning the company announced that they're going public. 

Read more from Kapitall: The Olympics: Big Business from Start to Finish?

King's leaders have been planning this for a while, filing confidentially last year as profits surged  over 7000%

King Digital is much, much more profitable than many of stocks that went public in 2013, particularly in tech, where the focus is usually on product or growth. King makes almost $2 billion in revenue, and have a net profit margin around $500 million. That dwarfs even some tech giants like  Amazon (AMZN), whose profit margin was less than 1% last year. 

And yet the IPO is still inviting skepticism, even more so than hot IPOs like Twitter (TWTR), because King makes pretty much all of its money off three games. And as the tale of Zynga (ZNGA) may suggest, one company producing two hit games is a little like hoping that lightening will strike the same place twice. 

Which raises the question: is profitability enough to court investors? Does it even matter that much?

We decided to look back at 2013's class of IPOs, ranking them based on the highest pops on their IPO day.  An IPO pop is the amount the share price rises on the first day, between the actual offering and the market's close. Typically, organizers shoot for an IPO pop of around 15%.

That's because there's a very tricky balance to be struck: you don't want too much of the money raised to go to investors, as the company needs it grow. That's why it's going public.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs