So Candy Crush went public this week and it did not go well, and I have to admit I got a weird amount of satisfaction watching it happen.
King Digital Entertainment, the company behind Candy Crush Saga (and about 200 other match-three games you have never heard of and never will), priced its IPO at $22.50 a share on Wednesday and started trading on the New York Stock Exchange under the ticker KING. Within minutes it was under $21. By the closing bell it had settled around $19, down roughly 15% on day one. That is not a rough first day, thats a company getting told, politely but firmly, that Wall Street is not as obsessed with jelly beans and licorice as your aunt is.
I dont think this is complicated, honestly. King makes something like $1.9 billion a year almost entirely off people paying real money for fake lives and fake boosters inside a game you can download for free. Thats an insane business when it works, and it clearly worked for a couple years there. But the second you ask investors to bet on that number growing forever instead of just cashing in while it lasts, people start doing the math on whether Candy Crush is a company or a fad wearing a company costume. Everyone remembers Zynga doing basically the same thing in 2011 - big free-to-play hit, IPO, and then the hit fades and the stock just kind of sits there looking embarrassed. King is one game deep into that exact pattern and everybody in the room knew it.
Heres my confession, since Im apparently the only person on the internet willing to admit it: I have spent actual dollars on Candy Crush lives. Not many! Maybe six bucks total over a year, in like four separate moments of extremely weak willpower at 11pm when I was three moves from finishing a level and didnt want to wait the 25 minutes for a life to regenerate. Im not proud of it. But Im also exactly the demographic the whole IPO pitch was built on, and if a marginally-annoyed guy with a blog is only good for six dollars a year, I dont know how you build a growth story on that. Multiply me by sixty million players and sure, it adds up to real money right now. Multiply me by "still doing this in five years" and I get a lot more skeptical, and apparently so did everyone buying shares on Wednesday.
What gets me is the timing. This is the same week Facebook announced it's buying Oculus for two billion dollars, so you'd think a mobile games company with actual revenue and actual profit going public would look downright boring and safe by comparison. Instead it flopped harder than a company that makes goggles nobody outside of a Kickstarter campaign has ever tried. Markets are weird like that. Sometimes the thing that seems more grounded gets punished harder because people can actually run the numbers on it, and the number they ran on King was "one hit game, and the hit is already sixteen months old, and the follow-up titles arent replacing it fast enough."
I dont feel bad for King. They will be fine, they have a pile of cash now and a hit that still prints money even in decline. But I do think this is a decent little marker for where mobile gaming is at right now, three years into the app store gold rush. The free-to-play, whale-hunting, energy-meter model built some genuinely enormous businesses (Supercell, Zynga in its day, King), and now the second generation of them is finding out that public markets want to see what comes after the one game, not just how well the one game is doing. Candy Crush is still, today, one of the most-played games on earth. That apparently isnt the same thing as being a good stock.
Anyway. I uninstalled it again for the third time this year. Lasted about four days last time before I put it back on my phone during a dentist waiting room, so lets not pretend this is permanent.