News Column

'Candy Crush' isn't actually sweet enough

July 7, 2014

A: King Digital, better known as the maker of the Candy Crushgame for mobile phones, is turning into a winner for investors.

Shares of the company have soared almost 14% over the past three months, easily topping the 7.1% increase by the Standard & Poor's 500. Bullish investors are encouraged by the fact the stock is crawling back toward the initial offering price set at $22.50 a share back in March.

Much of the sudden increase in King Digital shares has to do with behind-the-scenes trading factors, says Arvind Bhatia, analyst at Sterne Agee in a note to clients.

Bearish investors have bet heavily against the stock. The number of shares being bet against is nearly half the 10.8 million shares available for trading, Bhatia says. That means when bearish investors buy the stock, to close out their bets at the end of the quarter, it caused the stock to rise temporarily.

King Digital may also be benefiting from a rise in shares of rival Blu Mobile following the release of its popular Kim Kardashian: Hollywoodmobile game, he says. Still, investors shouldn't be tempted into shares of King Digital, Bhatia says. The company relies onCandy Crush Sagafor a bulk of its business, a dangerous proposition if the game's popularity falls.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: USA Today

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters