What model and assumptions were used to establish the $22.50/share price? What do you think is the value of KING? What model would you use?

http://www.usatoday.com/story/money/markets/2014/03/26/candy-crush-ipo-king/6901439/

Investors sour on Candy Crush IPO’s first day

IPO shares of King Digital Entertainment, maker of the massively popular Candy Crush mobile app, fell 11% in their first day of trading Wednesday.

The initial public offering, which debuted on the New York Stock Exchange under the symbol KING, declined $2.52, or 11%, to $19.98. The shares original price was set late Tuesday at $22.50 a share, which was at the midpoint of the expected range.

King is the latest disappointment in a much-hyped and widely watched tech IPO. Facebook’s IPO in May 2012 also opened weak and the stock rapidly declined in its first few months of trading. King’s IPO reception a big hit to confidence to tech investors, who were hoping this deal would be the one that signaled that the IPO market was open again to young tech companies

The weakness in the stock demonstrates while investors are eager to get their hands on IPOs this year, they’re still being selective and choosy. IPOs have popped 22%, on average, on their first days of trading, Renaissance says. To see King display a decline this early on shows that investors may be concerned about the company’s future growth, despite its success recently.

King Digital is the maker of the popular game for mobile phones called Candy Crush. The company is highly profitable, earning $567.6 million during the year ended Dec. 31, 2013. But investors are worried that Candy Crush could lose its attraction with investors soon, causing the company problems in maintaining growth. Many online and mobile gaming operators hit on popular games that captivate consumers’ attention for a few months, only to fade away and be replaced by another hit title.