Krafton (PUBG) accounted for 87% of revenue from Asia excluding South Korea in the first to third quarters, a large part of which came from sales in China market by Tencent.
At nearly $500 per share, Krafton’s IPO was considered unsuccessful when the value fell to 8.8%. Analysts attributed the stock slump to South Korea’s second-largest IPO due to expensive voting and Chinese regulatory risks that made Tencent powerless.
Krafton shares were down 9.9 percent from the 498,000-won IPO price. Making it South Korea’s lowest trading debut since LG Philips LCD. Now LG Display, first went public in 2004, according to data from Refinitiv Eikon.
Krafton accounted for 87 percent of revenue from Asia excluding South Korea in the first to third quarters. A large portion of which was mentioned by analysts from Tencent-backed China sales. “About 70% of the revenue comes from Tencent,” LightStream Research analyst Mio Kato told Reuters.
Consequences of being too dependent on Tencent
Douglas Kim, the analyst at Smartkarma, told Reuters: “This is a typical case of the owner being greedy in the company’s price assessment. The IPO price range has been lowered. resulting in the company reducing its market value.”
Tencent lowered its asking price to $870 million shortly after the market opened. So far, PUBG Mobile localized as Game For Peace in China released by Tencent has generated $6.3 billion in revenue on the App Store and Google Play. In the first half of 2021, this battle royale game generated $1.5 billion globally. Up about 5% over the same period last year.
Krafton shares may have fallen 20 percent after the open. But still earned $3.75 billion and rank as South Korea’s second-largest offering after Samsung. Tencent Holdings Ltd’s cut of more than 1 trillion won ($870 million) has greatly affected the company’s 300 percent.
Krafton is based in Seoul, surpassing earlier established industry names such as Nexon and Take-Two or NCSoft after an IPO.
In particular, Mr. Chang Byung-gyu – CEO at Krafton – owns a 14% stake valued at 3.5 trillion won based on IPO prices. According to the Bloomberg Billionaires Index. He joins the list of self-made billionaires in South Korea, where family corporations have controlled the majority of their assets for decades.