3346478

Last week, Candy Crush Saga creators King filed for an IPO with a plan to raise $500 million. With this in mind, we take a look back at some of the biggest tech IPO’s in recent history and see whether they’ve left investors wishing they had, or hadn’t, put their faith in the company.

Facebook

When Facebook went public in May 2012, it became the largest tech IPO in U.S History. In its first day of offering it raised $16 billion which valued the social network at $104 billion. At the closing bell, shares were valued at just $0.23 above the IPO price, and in the subsequent weeks to June 6, the price fell and investors lost over $40 billion. The Wall Street Journal called the IPO a fiasco and law suits were filed against underwriters saying that adjusted earnings estimates were revealed to preferred clients, and that they all cut their earnings forecasts for the company in the middle of the IPO. The shares reached an all time low of $17, however in the time since then they have recovered, and they are currently trading at $69.2.

5741504

Zynga

Zynga were the company behind the online social farming phenomenon Farmville, which within 6 weeks reached 10 million active daily users. On December 16 2011, Zynga began trading on NASDAQ at an original price of $10, however after the first day of trading it closed down 5% to $9.50. After that it slowly rose to a price of $14.50 in March 2012 as Facebook filed for an IPO and said that 12% of their revenue came from Zynga. As per above, Facebook’s IPO was weak, and after announcing poor earnings results, Zynga’s stock constantly fell and bottomed out at $2.09 in 2012. Since then the stock has really failed to climb and give investors any hope of making their money back, let alone a profit. The stocks currently trade at $5.25, a jump in price only because a recent fraud lawsuit on some of its shareholders was dismissed on Wednesday.

1974392

LinkedIn

LinkedIn, the professional networking site, went to the New York Stock Exchange in May 2011 with an IPO price of $45. Within the first day, the stock price rose as much as 171 percent, and closed at $94.25, more than 109 percent above the IPO price. Days prior to the offering, the company had proposed a price range that valued it at just over $3 billion, however after its unprecedented first day of trading, the company was worth nearly $9 billion. Since then, their stocks have gone upward giving investors something to smile about. They are currently trading at $212, with a 52 week high of $257, and a low of $155.

3382995_orig

Twitter

Twitter was created in March 2006 and since then the social networking and micro blogging service has never looked back. To date, it is one of the most successful start up companies of all time based on market capitalisation, revenue, growth and cultural impact. Twitter hit Wall Street in November 2013 with an IPO of $26 a share. Throughout the day it rose as high as $50.09 before closing at $44.9, a rise of nearly 73% and valuing the company around $25 billion. Share price hit a high of $73.31 in December last year, however when the company reported a sharp slowdown in user growth, the shares fell almost 25%, wiping off $9.8 billion in market value. Following this at least 8 brokerages issued a ‘sell’ recommendation on the stock, which is currently trading at $55.90.

4066998_orig

Having looked at this history of tech start ups who float their companies, do you see King to be a good investment? The essential element for the future of the company will be whether or not it can replicate the success of Candy Crush. In its last quarter, revenue declined from $621 million to $602 million, so it will need to prove to investors that it has the innovative ability to regularly develop worldwide hits, especially now that the active monthly user figures for Candy Crush are decreasing, suggesting that the game is starting to lose momentum, potentially creating a gap for another frustratingly addictive game. Will King fill this void again? Only time will tell, but if I had some spare money to put into shares, I couldn’t see myself backing these guys to deliver another game as dominant as the one which made them so famous.
Posted By Matthew Davidson – Marketing Cadet

Marketing Cadet

Each year we look to give an aspiring uni students the chance to gain some professional experience and learn about business operations through a cadetship. Fostering the growth of young minds is a passion, and benefits everyone involved.

Share This