The Next Hot IPO to Get Crushed 70%?

Candy Crush is on a candy rush to IPO -- or so say all the pundits.

Lately, the Interwebs have been practically humming with anticipation that the maker of the popular Candy Crush app -- Midasplayer International Holding Co, better known as King.com -- is gearing up to go public. What investors are wondering, though, is whether we're being set up to fail again, after watching the stock of a similar company, with a similar business model -- Zynga (NASDAQ: ZNGA  ) -- crash and burn, and burn its bridges with Facebook (NASDAQ: FB  ) along the way.

Since its IPO, and since unbundling its sign-in process from Facebook earlier this year, shares of Zynga are down 70%. This naturally worries investors. Yet there are significant differences between the two companies, differences that may allay investor concerns that what happened to buyers of the Zynga IPO will happen to early investors in King as well.

What we know
Much about the upcoming King IPO remains a mystery. Pricing has not been announced. Timing of the IPO, neither. But we do know a few things about King.

Source: Wikimedia Commons.

King is bigger
In the period ending in March 2012, Zynga reported having 65 million active daily users of its products. A year later, the March 2013 tally had dropped 20%, to just 52 million. King, in contrast, says it's now entertaining more than 70 million daily users of its "saga" games, which in addition to Candy Crush, include Pet Rescue and Farm Heroes.

King is popular
With 15 million daily players, Candy Crush is the hottest gaming app on the market today. According to gaming app-tracker thinkgaming.com, Candy Crush currently ranks No. 1 among the top grossing apps for Facebook, and No. 1 on the market overall. It's the No. 3 most popular free app.

Actually, make that "freemium," because Candy Crush is actually making a lot of money for King through the sale of in-app items such as lollipop hammers and extra "lives." Thinkgaming.com last clocked the company making $632,867 per day in revenue off Candy Crush alone. That works out to just over $230 million annually. And once you roll in the revs from its other games, the U.K.'s Telegraph estimates that King is holding court over a revenue stream close to $530 million wide -- up 300% from one year ago.

King is older, and (money-) wiser
Now granted, Zynga made popular games once, too. Indeed, it rode the road to IPO riches on the strength of its FarmVille and CityVille franchises -- and then bombed when those games lost popularity. The same could certainly happen to King if its Candy Crush game, for example, loses hold over the attention of a fickle gamer-nation.

Yet despite its games' initial success, six-year-old Zynga has earned a full-year profit only once, in 2010. Privately held King, in contrast, is both more experienced -- set up in 2003 -- and says it has been profitable every year since 2005.

That's eight straight years of King proving it's no one-hit wonder.

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