Nexon, who recently launched the largest initial public offering on the Tokyo Stock Exchange this year, has seen its stock drop during its first day in trading. The IPO offering price was ¥1,300 per share ($16.65), but the stock initially sold slightly higher at ¥1,307 ($16.74) before falling to ¥1,249 ($16.00) this morning. Nexon raised $1.17 billion after selling more than 70 million shares. The publisher plans to use that money for expansion into other regions and acquiring smaller companies.
“We’ve got pretty broad sales growth across the world,” Nexon CFO Owen Mahoney told Bloomberg. “We’re really excited about China. Some people debate whether China’s got a lot of growth in it. We think China is very early days.”
“We want to have currency and cash on hand to be able to move aggressively if and when opportunities come up,” he said. “We like to buy teams and properties early in their life. We can really bring a lot to the table. We know how to tune a game so that people will play it for months on end.”
Some analysts wonder if Nexon really launched at the right time, considering that many are hesitant to invest in social gaming and the company is not ready for Japan’s focus on mobile markets.
“The stock price might have been higher if it was listed when social games were hotter,” said Yoshihiro Okumura at Chiba-Gin Asset Management Company in Tokyo. “The social games theme seems to be cooling down.”
“It may be difficult for Nexon to win in Japan,” said Cosmo Securities senior analyst Tomoaki Kawasaki. “The Japan market is all about mobile, and Nexon is a bit of a laggard in that area. A user has only 24 hours a day. For a game company in general, what’s important is how much of that time they can capture.”
The drop in Nexon shares could also affect investor confidence in Zynga’s upcoming IPO, as both companies operate on similar business models.
