First, Twitter. Now, King. The maker of popular Facebook game Candy Crush Saga has filed a confidential S-1 for U.S. public stock offering. Potential investors should remain skeptical, Fool contributor Tim Beyers says in the following video.
Not because it's a bad business, per se, although close peer Zynga (NASDAQ:ZNGA) has had trouble generating sustainable growth from social gaming. The company's base of monthly unique users has declined over the past year, while payers (i.e., those who directly contribute to revenue by paying real money for virtual goodies) now represent just 1.5% of monthly players, a full percentage lower than it was two years ago.
King hasn't had that problem. At last count, more than 70 million were playing its "saga" games daily. Twitter, for its part, serves more than 500 million total users and 200 million active users. So what's the worry? Tim says confidential filings could obscure management miscues in the early stages of the diligence process while producing sanitized disclosures.
Investors won't get to see these IPO candidates at their worst, which could lead to ugly surprises later. Tim advises would-be buyers to take extra caution before buying into either offering. Do you agree? Please watch the video to get Tim's full take, and then leave a comment to let us know where you stand.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
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