King Digital: We're Avoiding Buying Into Candy Crush

King Digital, maker of Candy Crush, looks like a deal with its P/E of slightly over 10. Yet, it's business looks set for a fall.

Eric Bleeker
Eric Bleeker and Matthew Argersinger
Apr 1, 2014 at 2:13PM
Technology and Telecom

In the video below Fool portfolio manager Matt Argersinger and managing editor Eric Bleeker discuss tech events across the past week. 

In the video below, the two discuss the recent lukewarm IPO from mobile gaming company King Digital (UNKNOWN:KING.DL). The intriguing aspect of King's IPO is that unlike many other companies tapping public markets recently, it's solidly profitable. It's P/E currently sits slightly above 10, which is only about half the level of the general market. 

Yet, Matt and Eric both discuss the difficulty staying on top sales charts in the mobile gaming world. Investors are familiar with Zynga's (NASDAQ:ZNGA) plight, the company has struggled in recent years as the popularity of Farmville faded. However, another prime example would be Gungho. That's a Japanese company that published the hit game Puzzles and Dragons. At one point, its value briefly surpassed Nintendo, but as revenues flat-lined investors headed for the exits. Its current share price is less than half of what it was last year. 

To see Eric and Matt's thoughts on King Digital and why it's not the value its P/E might imply, watch the video below.