Investors have a lot of power, able to turn yesterday’s superstar companies into tomorrow’s has-beens on little more than a performance wobble.
Just ask King.com, who reported a slight drop in the number of people playing Candy Crush Saga in its latest earnings report, only to see investors dump a bunch of the company’s stock, which dropped its share price by a whopping 25% and chopped a billion dollars off its net worth according to Buzzfeed.
That’s pretty harsh – even though the “slight drop” translates to five million fewer people playing Candy Crush Saga now compared to this time last year, the total number of people actively playing the game is still almost twice what it was back in 2013 when the buzz around Candy Crush was at its peak. To most people that’s still pretty good going, but clearly it’s not what investors want to hear.
What the company needs is another smash-hit game to bring in more paying players who can drive up its revenues and allay investor fears of stagnation and convince them that King.com isn’t a one-trick pony that isn’t going to reproduce the magic of Candy Crush Saga and will instead fade into obscurity like Zynga (FarmVille makers) before it.
King has developed a number of new games including Papa Pear Saga, Farm Heroes Saga and Bubble Witch Saga 2, none of which have taken off to the same extent that Candy Crush Saga did, leaving them in dire need of finding The Next Big Thing to drive their revenues skywards.
To that end they have invested in a new studio, Singapore-based Nonstop Studios and are in the process of rolling out a localised version of Candy Crush Saga for China in partnership with Chinese internet portal operator Tencent, in a bid to extend their geographical reach and, naturally, boost revenues.
The company is still massively profitable, returning a “special dividend” to its shareholders to the tune of $150 million, but even that wasn’t enough to stop skittish investors sending its share price plummeting on the news that its second quarter “gross bookings” came in below expectations due to fewer players playing.
King’s story isn’t over yet, but it’ll be interesting to see what it comes up with in the coming months to re-ignite investor confidence.[Source – Buzzfeed, King.com]