Tomahawk, WI 08/13/2014 (Basicsmedia) – King Digital Entertainment PLC (NYSE:KING) stock was plummeting on Tuesday trading session by highs of 20.82% in intraday trading session but later on moved up by0.82% to close the day at a high of $18.20. The massive decline in the market came as the company cut its sales outlook for the year due to gamers spending less on Candy Crush Saga. Even before the dust settled, another debate was already gaining momentum as to whether the company should go forth and offer a dividend of up to $150 million, according to, Kevin O’ Leary, in an interview on CNBC.
King Digital Entertainment PLC (NYSE:KING)’s board of director had a proved a special dividend to be paid to shareholders as of September 30, 2014 an-amount that Mr. O’Leary believes should have been put to better use. Mr. O’Leary maintains the money should have been used to acquire new content instead of relying on one game for revenue streams.
“[…] This company should be using its currency whether be it stock or whether it uses its cash to go and acquire content. I mean everybody is focused on the blazing problem because revenue is coming from one game, and there is so much risk on that. They got themselves public they couldn’t use the paper to buy more developers. Putting the cash out tells me its end of life story here they don’t have better use of it. That they return it to shareholders. I am a big fan of dividends you know that,” said Mr. O’Leary.
Investors have already raised concerns that the company needs to deliver a new set of consistent games instead of relying on ‘Candy Crush Saga’ to avoid facing the same fate as ‘Farmville’ maker Zynga Inc. (NASDAQ:ZNGA). Another concern according to Lance Ulanoff is the fact that King has been facing declining numbers of active users as a result of lack of new content taking into consideration that Candy Crush Saga might be considered’ outdated at the moment.
“I think it is not the newest thing and with these games it’s what is the newest thing and people could move on. The games are all very similar, so it is pretty easy to supplant it with another one. As I thought about this, I know the key is the active users, they have to continue to grow or replace it with brand new games,” said Mr. Ulanoff.