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

4 stocks to watch before the King Digital IPO

Chris Lau, Kapitall: Keep an eye on these four stocks in the wake of the King Digital IPO saga.

When the King Digital (KING) IPO (initial public offering) completes on March 25, there will be 15.5 million shares sold to the market. At a price of up to $24, King will be worth as much as $7.6 billion. If markets hold up (it sold off heavily on March 13), King will be yet another successful IPO. Conservative investors might want to avoid King, and look elsewhere ahead of the IPO.

King is risky

King’s big achievement in the mobile space is its Candy Crush Saga game. At the high-end of the IPO Price of $24, King will open at nearly four times bookings of around $2 billion. By comparison, it will trade at half the market cap of Activision (ATVI), be on par with that of Electronic Arts (EA), and will dwarf Glu Mobile’s (GLUU) sub $400 million market cap.

Ever since Vivendi reduced its stake in Activision, liquidity for its shares improved and shares rose. A previous decision by the chancery court to halt Activision’s buyback was reversed. Unsurprisingly, short interest in its shares are down over 25% as of February 28.

Analysts expect positive momentum from Electronic Arts. Demand for its game, Titanfall may give its shares a boost.

Zynga (ZNGA) will most likely get the biggest boost ahead of King’s IPO. Zynga is moving aggressively into mobile, but is still be remembered as a company reliant on Facebook for growth. Back then, Zynga was best known for Mafia Wars and FarmVilleFarmville 2 will let users play offline on a mobile device. The game will also let users transfer goods between farms on Facebook and mobile.

Back when Facebook (FB) IPOd, LinkedIn (LNKD) received a boost in its share price by the start of 2013.

Despite the temporary boost for Zynga, risks are high for Zynga and King. Both rely on hit game titles for growth. EA and Activision proved they can produce winning titles, on top of growing sales for other game titles. Speculators will therefore favor Zynga and King, but investors who want exposure to the gaming sector will want EA and Activision instead.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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