Candy Crush maker King Digital raises $500 mn in IPO

New York — King Digital Entertainment, the creator of the wildly popular video game Candy Crush, priced its initial public offering at $22.50 per share Tuesday, raising $500 million in its Wall Street debut.

The British game developer sold 22.2 million shares in an offering priced at the midpoint of the $21-$24 range previously targeted.

King will begin trading on the New York Stock Exchange Wednesday under the ticker "KING" with a market valuation of $7.1 billion.

The money raised in the issue could reach $574 million depending on market demand for an additional 3.33 million that could be issued underwriters, the company said.

Established in 2002, King's business has soared in the last two years thanks to the spectacular popularity of Candy Crush Saga , which boasts some 97 million players worldwide.

The Tetris-like format requires players to line up sweets and bon bons through 500 increasingly difficult levels.

But the addictive qualities of Candy Crush, and the company's ability to monetize that by users on computers, tablets and cellphones paying extra to help them advance through its 500 levels, underpin the sky-high valuation.

The company says its games, which also include Farm Heroes and Pet Rescue, are installed on 600 million mobile devices, and played over 1.4 billion times a day -- more than one billion alone for Candy Crush.

Profits in the fourth quarter reached $159 million.

However, analysts have cautioned that King's long-term earnings viability remains questionable owing to its business heavily reliant on a single product.

Research firm PrivCo notes that King itself estimates the average lifespan of a paying player on a particular game at two to nine months.

Given that much of the growth in Candy Crush subscribers ended in the first quarter of 2013, "many of the paying players on Candy Crush will soon reach the end of their estimated playing period," PrivCo said.

"As a result, King's other games will need to grow at much faster rates if King is to maintain its current growth rates."

Analysts have noted that Zynga, creator of the once-mighty "FarmVille" game lost 40 percent of its value after entering the market in December 2011 with a valuation of $7 billion.