Rovio’s Rocky Road 🐦
Rovio stock dropped precipitously over the past year and is now down to a market valuation of $300M. Compare their market valuation relative to Glu Mobile valued at over $1B and Zynga currently valued at $6.6B. The biggest drain on margins has been Hatch, a premium mobile games streaming service that is largely being propped up by Rovio.
With the decline of the Angry Birds brand, resulting in a loss of both licensing revenue and organic growth for new games, where does Rovio go from here?
Of the new games in soft launch (Sugar Blast, Small Town Murders, World Quest, and Phoenix Rangers), Sugar Blast seems to have the best soft launch metrics. However, none of these games so far seem like they will be able to drive significant revenue growth.
Given the current company situation, we would expect to see some kind of change: jettison of Hatch and either an acquisition of the company or restructuring. Zynga made $369M on the sale of its San Francisco HQ last year, a move that was specifically allocated for future acquisitions, and they have yet to pull the trigger.
Is Rovio an acquisition target for Zynga or other acquisitive companies like Stillfront? Is a major restructuring in store?
We believe there should be a big move later this year. Stay tuned!
Link: Rovio profits tumble as Hatch continues draining resources
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