Krafton, a South Korean company and maker of the famous Battlegrounds (PUBG) video game, fell nearly 20 percent of its IPO price at its start of trading on Tuesday.
Krafton is South Korea’s first major stockbroker with shares that have failed to rise above its initial public offering (IPO) since its inception last year, according to an online report.
Stocks kept in Korea Won (KRW) 444,000 of Rs 28,720 for morning trading, down 11 percent from the IPO price of KRW 498,000 – about Rs. 32,220, valued the company at approximately $ 18.9 billion which is approximately Rs 1,40,580 crore.
Krafton received 87 percent of Asian earnings, with the exception of South Korea, in the January-March quarter, much of which was estimated by analysts to be from China’s sales hosted by Tencent.
“About 70 percent (of sales) appear to be from Tencent. China is already making noises about (and Tencent’s) ‘Honor of Emperors’. If they also want a change in the ‘Peacekeeper Elite’ that could be a mistake and it could be a very bad thing, “Reuters quoted LightStream Research analyst Mio Kato as saying.
The news agency also quoted analysts as saying that the costly equity and regulation of Chinese law could be a reason for stocks to fall. Krafton receives most of its revenue from PUBG.
Reports also speculate that the video game accounts for about 97 percent of the company’s sales.
Krafton, maker of PUBG and Battleground Mobile India, is worth $ 19 billion
The company has reportedly revised its price target after regulators in South Korea said its valuation was too high which led to a 25 percent reduction.
“There may be a question as to whether Krafton can create movies, short films, or animation but we have to expand on a variety of media products because that is what customers want and where the media is targeted,” Chang Byung-Gyu, founder and chairman of Krafton, said An online press conference online on Tuesday.
Krafton amassed $ 3.75 billion of Rs 27,890 crores in South Korea’s second-largest IPO after the floating of Samsung Life Insurance in 2010, and after the company cut its quarterly revenue target after regulators ordered it to review its submissions.
Sixty-five percent of the IPO’s revenue will go to Krafton, which plans to spend most of its money on other sports companies.
The rest goes to shareholders who withdraw their investment. Krafton chief executive Kim Chang Han in an interview noted that the company plans to use some of its IPO funding to hire 100 researchers in the field.
