As discussed before IPO I had some doubts about sustainability of the valuation level of this interesting stock. Later browsing through the revenue development I was curious to see what happens after Q1. Now the results are out.
Daily active users (DAU) were 143 million and monthly active users (MAU) were 481. Funny observation is that many compare these into similar month from previous year. That is something I do not comprehend. Firstly games are not seasonal business. Secondly as this has been a growth company just starting up, it is relatively easy to beat numbers from previous year. But don’t people realize what things look like as roller-coaster has reached the peak?
If those figures are compared to previous quarter, they are still rising, but with some what more conservative percentages. DAU by 15% and MAU by 18%. Positive thing here is that King seem to be able to still attract more interested users compared to figures from previous quarter.
The reported revenue was $606.7 and earnings reached $127.2 million. Revenue was increasing 0,8% compared to Q4/2013. Earnings seem a bit disappointing to me. Compared to Q4/2013 ( which was already dropping from previous month) the came down by 20%!
Obviously this company is now struggling with trying to get next big game into market which is hitting into profitability. Game business seem to be game business for investors too.
Well, I still play occasionally Candy-crush with kids, but I feel that sooner or later have to figure out something new. I have to confess that I have not yet found reason to contribute into revenue stream of King anything, but as other have found that we have to wait for Q2. After that I think we have to see some direction in numbers. Still following with interest as I see this stock good example to learn from of behavior of the market today.
While writing this stock is trading around $16. Long way from $22.50. As it is about 29% down we have reached the range introduced in my valuation questimate earlier. I still think that the lower end of that range could be possible, unless the new game kicks into market.