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(Reuters) - King Digital Entertainment Plc's KING.N stock plummeted about 10.5 percent on Wednesday, even as the maker of the popular mobile game "Candy Crush Saga" reported better-than-expected first-quarter results.
Investors have been concerned about the company's over-reliance on its most-successful game "Candy Crush Saga," which accounted for two-thirds of its gross bookings.
King's shares dropped 10.4 percent to $16.80 in morning trading. The stock has not touched its IPO price of $22.50 since King went public on March 26.
"There’s a lot of companies in the TMT space this quarter that delivered fine results and the stocks tumbled," Doug Creutz an analyst with Cowen and Company said. "The market seems to be in phase where it hates anything that sounds like growth right now ... Frankly, this is silly."
Helped by higher gross bookings for its hit puzzle game "Farm Heroes Saga," King's first-quarter revenue rose three-fold to $606.7 million from the year-ago period.
Excluding items, it earned 61 cents per share. Analysts on average were expecting a profit of 59 cents per share on revenue of $601.5 million, according to Thomson Reuters I/B/E/S.
King, which has developed over 180 games, said total gross bookings rose 1 percent from the preceding quarter.
Executives told analysts on an earnings call that King's two-year-old "Candy Crush Saga" is showing signs of slowing down. It accounted for 67 percent of gross bookings in the first quarter compared with 78 percent in the quarter ended Dec. 31.
"The decline of Candy Crush Saga will be mostly offset by our new IP (games)," King's Chief Executive Officer Riccardo Zacconi said on a call with analysts.
King plans to launch new titles in the second half of the year. Whether "Farm Heroes Saga," which released on mobile devices in January, continues to retain users and King's new offerings are successful, remains to be seen.
Investors have worried that unless King delivers a set of consistent and long-lasting hits, apart from "Candy Crush Saga," it might suffer the same fate as "Farmville" maker Zynga Inc ZNGA.O and "Angry Birds" developer Rovio Corp, which are struggling to retain players.
London-based King's net profit rose to $127.2 million, or 41 cents per share, in the quarter ended March 31 from $52.7 million, or 16 cents per share, a year earlier.
King's shares hit a low of $15.84 on April 15 and closed at $18.76 Tuesday on the New York Stock Exchange.
Reporting by Malathi Nayak and Lehar Maan; Editing by Savio D'Souza