King Digital Entertainment Could Be a One-Hit Wonder

NEW YORK (TheStreet) -- At the end of March, King Digital Entertainment (KING) made its official debut under the watchful eye of Wall Street. King Digital Entertainment is the official company behind the classic game Candy Crush, a game that has put many individuals (including myself) on the receiving end of an insane amount of game requests on Facebook (FB).

Unfortunately, King Digital Entertainment had a debut similar to a rookie quarterback throwing three interceptions in his first NFL start. It was an ugly welcome to life in the big leagues.

After opening at $20.50 a share, King Digital Entertainment fell 15.56% in its debut to close at $19.00.

While King Digital Entertainment contains other mobile games such as Pet Rescue Saga, Farm Heroes Saga and Bubble Witch Saga, the firm's success is heavily reliant on the success of Candy Crush. The game has become so synonymous with King Digital Entertainment that its recent IPO has been referred to as "The Candy Crush IPO."

Some investors are concerned by the fact that King Digital Entertainment is heavily reliant on one game for its success.

A cautionary tale of a firm's over-reliance on one entity can be seen in Zynga's (ZNGA) relationship with Facebook. In its 2011 IPO, Zynga acknowledged that it generated all of its revenue and user base from the Facebook platform. Consequently, the firm acknowledged that the company's business would suffer if its relationship with Facebook turned sour. Thus, investors soured on Zynga's IPO.

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