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A Reminder on IPOs

March 26, 2014
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I get that public companies are held to very different standards than private ones.  I get that doing an IPO is important, and that the first few days of performance are a big deal.  But really, stop

Shares in King Digital, the games developer behind Candy Crush Saga, have fallen as much as 15% on their debut at the New York Stock Exchange.

The shares were trading at $19.08 each, down from the listing price of $22.50.

King’s flagship game Candy Crush was the most downloaded free app of 2013 and has boosted the firm’s revenue.

But there have been concerns it relies too heavily on the game and doubts over whether it will be able to sustain its popularity and growth over time.

The firm’s portfolio includes more than 180 games, but only a few have been popular with users.

You know what IPOs really do?  They RAISE MONEY for the company to go execute on a strategy.  Once a company goes public, it’s held to a very different set of measures, but the price of the stock is irrelevant to anyone but the shareholders.  The key news in this announcement is that the company has $500M in capital.

If you remember, Facebook was viewed as a disappointing IPO, and the stock has gone up significantly since the IPO.  Google was viewed as a moderate IPO, and it’s through the roof.  So don’t pay attention to the stock price, but pay attention to the capital raised and how it’s being spent.

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