Few days ago I was little too rough on estimating “fair” value of King. I gave range of 20-40% over valued in that previous post. First day’s drop was -16% for IPO valuation. Following up closely how second day opens up.
Source: Yahoo Finance
Bloomberg tells that Arvind Bhatian (an analyst from Sterne Agee & Leachin) has forecasted this years revenue for King to be $2.62 Mrd. This would lead to multiple of 2.7. I think the challenge here is that investors are hesitant to believe King’s capability to maintain revenue growth based on track record from Q4/2013. If King would maintain Q4 revenue level, it would reach 2.4Mrd revenue. With current products slowing down and new products about to be introduced it is hard to see such fast turnaround immediately. I would imagine it will take a while to speed up new revenue streams even to match with drop of current ones.
Still looking this with interest. Based on comments that investors were not too excited about this current discount price, I could imagine that I will check King next week after most of air has been taken out from valuation.