(Updates with closing stock price.)
Aug. 13 (Bloomberg) -- King Digital Entertainment Plc, maker of the Candy Crush Saga video game, plunged the most since its initial public offering after posting second-quarter sales that trailed analysts’ estimates and cutting its 2014 outlook.
King fell 23 percent to $13.99 at the close in New York, the biggest drop since the IPO in March, after the company said it’s struggling to generate revenue from current titles. At least five analysts cut their recommendations on the stock.
King is working to develop a wider assortment of games as the number of players for Candy Crush decreases. With new titles such as Pyramid Solitaire Saga, King has been trying to avoid the decline that hit Zynga Inc., which relied too much on FarmVille for revenue. King shares have slid 38 percent since the IPO through the close of trading.
“Candy Crush declined more than we had expected” in the second quarter, Riccardo Zacconi, King’s chief executive officer, said on a conference call yesterday. “Our non-Candy Crush games did not grow as much as we had expected and, as a result, did not offset the decline in Candy Crush.”
Adjusted revenue rose 29 percent to $593.5 million from a year earlier, the Dublin-based company said yesterday in a statement. That missed analysts’ projections of $605.7 million.
Bookings, the value of virtual merchandise sold during the period, rose 27 percent to $611 million from a year earlier, but slipped 5 percent from the first quarter, due to lower demand for Candy Crush, the company said.
King projects bookings of $500 million to $525 million in the quarter ending Sept. 30, according to the statement.
Doug Anmuth, an analyst at JPMorgan Chase & Co., downgraded the stock to the equivalent of a hold rating from overweight, saying the results were disappointing.
“King’s outlook assumes continued deteriorating trends, and no seasonal pickup,” Anmuth said. King’s non-Candy Crush titles had also come in below his estimates.
Analysts at Deutsche Bank AG, RBC Capital Markets and Barclays Plc reduced their ratings as well.
The company also declared a $150 million special dividend yesterday. Profit in the second quarter excluding items grew to 59 cents a share from 45 cents a year earlier, meeting the average of 12 analysts’ estimates.
King announced a Chinese version of Candy Crush in partnership with Tencent Holdings Ltd. in April.
Competitor Zynga, which makes FarmVille and Words With Friends games, is also adding new products amid declining revenue. The company recently signed agreements with the National Football League, Tiger Woods and Warner Bros. to create new games.