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Wedbush: Low Float Hurts King Digital

Wedbush: Low Float Hurts King Digital
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Wedbush Securities' Michael Pachter was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. 

King Digital Entertainment PLC (NYSE: KING)'s low public float is holding back its share price, an analyst told Benzinga on Thursday.

The Ireland-based maker of Candy Crush and other digital games has about 322 million shares outstanding, but its float is only 39.33 million.

"There are big investors who are poised to own King, but they can't get the shares," Pachter told Benzinga.

King is heavily owned by insiders, including a 48.3 percent stake held by the private equity firm Apax Partners and another 25 percent or so held by company executives and directors.

Institutional investors "need to own a $150 million position," Pachter said. "That's a third of the float."

If investors see insider sales, "and it's disciplined, you're going to see the stock go up," Pachter said.

The analyst, an enthusiastic player of Candy Crush, argues that King is undervalued.

Netflix, Inc. (NASDAQ: NFLX) trades at 100 times revenue according to Pachter, while King trades at five times revenue.

"I think that's crazy."

Latest Ratings for KING

Nov 2015Morgan StanleyDowngradesOverweightEqual-Weight
Nov 2015WedbushDowngradesOutperformNeutral
Nov 2015Stifel NicolausDowngradesBuyHold

View More Analyst Ratings for KING
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas Analyst Ratings Trading Ideas Best of Benzinga


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