By Carly Forster
Candy Crush maker King Digital Entertainment (NYSE: KING) announced its first quarter 2015 earnings report late Thursday, May 14, sending shares down 10%. Although the game maker’s first quarter results beat expectations, a mediocre second quarter outlook sent shares down.
Highlights from King Digital’s first quarter report include earnings of $0.51 per share and $569 million in revenue, up from $0.41 earnings per share and down from $606 million in revenue from the same quarter a year prior. Wall Street had expected the company to post $0.46 earnings per share.
King Digital’s Q2 guidance includes a range of $490 million to $520 million in gross bookings, which is significantly less than the company’s first quarter gross bookings of $604 million. The company said it expects its gross bookings to “be seasonally softer” due to its “game release schedule, the impact of foreign currency changes to date and recent trends.”
King Digital received a big boost in downloads for the sequel to its wildly popular game, Candy Crush, in the fourth quarter of last year, which picked the company up from out of a deepening hole. The company has said the success of the second Candy Crush game proves its ability to create popular games and extend the lifespan of its brands. The company has yet to launch a game with the same success as Candy Crush.
A handful of analysts weighed in on King Digital Entertainment following the company’s earnings announcement.
According to Smarter Analyst on May 15, RBC Capital analyst Mark Mahaney maintained a Sector Perform rating on King Digital with a price target of $17. The analyst is “incrementally cautious” on KING because of “the overall softness [of its Q2 guidance] in the mid-year” and the company’s “implied [quarter over quarter] decline this year is much greater than last year’s.” Mahaney noted, “For us to become constructive on the stock, we would need to see stable trends showing bookings growth AND diversification away from CC – which likely isn’t attainable until 2016.”
