The PUBG developer entered the stock exchange, but immediately after that his shares sank in price. Within an hour, Krafton’s capitalization dropped by 20%. Investors regarded it as a one-game company.
According to Bloomberg, the developers of the battle royale became the first company in South Korea this year to have a lower stock price after going public. At the beginning of trading, one share of Krafton could be bought for ₩498 thousand ($ 433), but by 10 a.m. the price tag dropped to ₩410 thousand ($356.4). Later, the shares recouped the fall, but only slightly — they rose to ₩ 422 thousand ($ 367).
In total, during the IPO, the company raised $3.8 billion.
As a result, Krafton’s valuation was ₩21.1 trillion ($18.4 billion). Despite the fact that it was previously assumed that thanks to the IPO it would grow to 28 trillion rubles ($25 billion).
According to Paul Choi, head of Korea Research at CLSA, the reason for the fall was Krafton’s strong dependence on PUBG. In addition, investors were concerned about the situation in China. Last week, state-controlled media called video games “electronic drugs”, which caused the shares of Tencent, NetEase and other large companies to collapse. The media also called for depriving the gaming industry of tax benefits.
Note that Tencent owns 13.2% of Krafton shares. Only the founder of the company Chang Byung-gyu (Chang Byung-gyu) has more.
Despite the unsuccessful debut on the stock exchange, in the future, according to analysts, the creators of PUBG will be fine. As Choi notes, 95% of Krafton’s revenue comes from outside Korea, unlike other gaming companies that focus mainly on the domestic market.
Last fiscal year, Krafton’s revenue was $1.49 billion (an increase of 54% year—on-year), and operating profit was $690 million (an increase of 115% year-on-year).