By
Chimamanda U. Martha
February 26th, 2024
In its first appearance in the market after raising $3.8 billion in its IPO, the shares of Krafton, Tencent-backed South Korean company behind blockbuster video game PlayerUnknown’s Battlegrounds (PUBG), dropped by as much as 20 percent. It later was trading at 13.5 percent lower at 10:48 a.m. in Seoul, thereby giving it a market valuation […]
In its first appearance in the market after raising $3.8 billion in its IPO, the shares of Krafton, Tencent-backed South Korean company behind blockbuster video game PlayerUnknown’s Battlegrounds (PUBG), dropped by as much as 20 percent.
It later was trading at 13.5 percent lower at 10:48 a.m. in Seoul, thereby giving it a market valuation of around 21.1 trillion won ($18.4 billion).
The massive fall in the price of Krafton shares on their trading debut has been attributed by many analysts to the extremely lucrative valuation and regulatory risks associated with China. Currently, a significant number of uncertain prospects confront gaming companies in the country after regulators began chasing down on a number of industries with new rules and guidance alien to the traditional norms guiding their operations.
Following the first day’s performance, Choi Jongkyung, an analyst at Heungkuk Securities Co, said the gaming company, prominent for making PUBG, has become the first KOSPI stock to drop on its trading debut since the beginning of the year.
He maintained that the size of the company’s share float was too big and its IPO was more than 1.5 times bigger than that of KakaoBank.
“There was also bad news from China during Kraftons IPO share subscription,” Choi said.
He also noted that after state media decried the spiritual opium of gaming time last week, the regulatory crackdown by authorities in Beijing is majorly expected to restrict the conditions under which game publishers operate.
According to Paul Choi, the head of Korea Research at CLSA, even though the gaming company is one of the biggest IPO around, its subscription date is relatively low.
Krafton was one of the biggest IPOs but it wasn’t popular in terms of subscription rate relative to other IPOs because it has so much dependence on one game, Paul said.
Based in Seoul, Kraftons debut is the second largest in the country after Samsung Life Insurance Co.s $4.3 billion listing in 2010. It joins a growing list of tech companies and startups that are going public in an IPO boom that is reshaping the nation’s corporate landscape. Shares of KakaoBank Corp., South Korea’s first internet-only lender, jumped 79% on its debut Friday, surpassing the valuations of the countrys traditional financial groups.
Founder Chang Byung-gyus 14% stake in Krafton had been valued at 3.5 trillion won based on the IPO price, according to the Bloomberg Billionaires Index.
