If you own a smartphone, the chances of it having Angry Birds seem pretty high. Rovio, creator of the popular mobile application, has found even greater success through its recent addition Angry Birds Space. It's the fastest-growing mobile game downloaded, surpassing 50 million downloads. Given all that success, it's not surprising that Rovio has plans for a possible IPO in 2013.
According to International Business Times, CEO Mikael Hed told his shareholders the company has increased its 2012 revenues tenfold to $100 million, with 800 million downloads. The company reported 2011 profits of $48 million before taxes with a 64% margin, which was up from $10 million in 2010.
It seems the company has a bright future -- analysts are valuing it for as much as $9 billion. Rovio also raised $42 million from venture capitalists, including firms such as Accel Partners and Atomico Ventures.
Although an IPO is set for the future, the obvious question is if Rovio will find success where Zynga did not. Zynga's stock, posted at $10 for its initial offering, has experienced a 52-week high of $15.91 and a low of $7.95. Though it raised $1 billion in its IPO, concerns about the mobile games' longevity come into play for investors. If there is any sign of a lull in the gaming industry, Rovio and Zygna's stock will take a significant hit.
Business section: Investing ideas
Rovio is highly valued by analysts and has experienced significant increases in profit with Angry Birds in comparison to other mobile game competitors.
Does Rovio possess the sustainable value needed to continue its success in games?
Will investors be hesitant to buy Rovio stock based on their observations with Zygna, or will the company beat expectations?
Here's a list of gaming stocks sorted alphabetically. (Click here to access free, interactive tools to analyze these ideas.)
1. Electronic Arts (NYSE: EA ) : Develops, markets, publishes, and distributes game software and content for video game consoles, personal computers, mobile phones, tablets and electronic readers, hand held game players, and the Internet. The company has a market cap of $5.01 billion, most recent closing price at $13.96.
2. Glu Mobile (Nasdaq: GLUU ) : Engages in the design, marketing, and sale of casual and traditional mobile games worldwide. The company has a market cap of $265.1 million, most recent closing price at $3.99.
3. Zynga (Nasdaq: ZNGA ) : Develops, markets, and operates online social games as a live service played over the Internet, through social networking sites, and on mobile platforms. The company has a market cap of $6.14 billion, most recent closing price at $8.08.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.