Rovio’s IPO Ends the Day Flat with Opening Price (Sep 29, 2017)
Rovio, the Finnish company behind the Angry Birds franchise, held its IPO today, just a day after TV box and platform maker Roku, but saw very different results. Whereas Roku saw a massive jump in its stock price in its first day of trading, Rovio’s stock ended the day back where it started, having traded in a pretty narrow range all day. In the context of Roku’s IPO and expectations for Spotify’s, I’ve been asked a lot recently about the prospects for tech IPOs overall, and my response is always the same: it’s not really about the “climate” for tech IPOs (though that clearly matters), but about the performance of each company in its own right. In the case of these two companies, a quick glance might make you think Rovio was actually in better shape, profitable and growing whereas Roku is unprofitable and growing. But it’s all about the trajectory and ultimate potential when it comes to valuations, and while Roku seems to be in the midst of a clear transition which should lead to profits and revenue growth, Rovio continues to be very reliant on a single franchise, Angry Birds, and though it’s expanded the nature of gameplay in games released under that banner considerably, none of its recent game launches have come close to matching the performance of the top games globally over the last couple of years. So Rovio is a mid-tier mobile game maker with some profits and growth but there’s no great success story here, nor any sign of a dramatic positive change in its fortunes. Spotify, on the other hand, is like Roku currently unprofitable, but there is at least a theory as to how it might eventually turn that around with enough growth in paid streaming, off the back of recently renegotiated record deals.
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