Why King Digital Entertainment PLC's Shares Got Crushed Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Candy Crush got smashed today when its maker, King Digital Entertainment PLC (NYSE: KING  ) fell 13% after reporting earnings.

So what: Revenue in the first quarter nearly tripled, to $606.7 million, but was only slightly higher than $602 million last quarter, showing signs that Candy Crush's popularity is fading. Profit was up from $52.7 million a year ago, to $127.2 million, but was down from $159 million a quarter ago. 

Now what: When you come public with a single product that drives your results, the pressure is on to come up with your next product, especially in the fast-moving app business. King Digital and its investors are finding that out quickly, and I still wouldn't be buying the stock today. App and game success is fleeting, and just because you caught lightning in a bottle once doesn't mean you can do it again.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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8/28/2015 4:02 PM
KING $13.50 Up +0.09 +0.67%
King Digital CAPS Rating: *