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Deutsche Bank Adds to Angry Birds Grief With Shock Valuation

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In less than half a year, one of the hottest initial public offerings in northern Europe has become a shareholder’s nightmare.

The company behind the Angry Birds game suffered its latest body blow on Monday, with analysts at Deutsche Bank AG telling clients the stock is probably worth only a third of its IPO value.

Rovio Entertainment Oyj, which lost 50 percent in a single-day selloff last month, has continued to sink in March. After dropping about 9 percent on Friday, the shares fell roughly as much again after the market opened in Helsinki after the weekend. Deutsche says the stock is only really worth 3.70 euros a piece. It sold for 11.50 euros in September.

Angry Birds Maker Dragged Out of Silence After Stock Is Dumped

Nizla Naizer, an analyst at Deutsche, says a “slower-than-expected games growth remains the key downside risk.”

Chief Executive Officer Kati Levoranta, who led Rovio through the IPO, told investors last week that she’s “not satisfied with the current performance.” The “intention is to return to a higher growth path,” she said.

Carnegie and Danske Bank A/S were joint global coordinators and joint bookrunners for the Rovio September listing. Deutsche Bank and OP Corporate Bank were also joint bookrunners. The shares traded around 4 euros on Tuesday, more than 7 euros below the IPO price.

After the IPO, Danske spent a month buying Rovio’s stock in so-called stabilization measures intended to keep the price near its IPO level. That failed to provide a lasting boost for the stock.

The main concern is that Rovio, which lost its games head a week after shocking the market with a profit warning, doesn’t have much else besides Angry Birds to make money from. There are also questions as to whether management has figured out how to turn a profit on its business model.

Angry Birds Maker Rovio Plunges After Games Head Quits

So far, Rovio’s efforts to broaden its games portfolio have largely faltered, with titles such as Jolly Jam never taking off. Licensing revenue has continued to plunge and Rovio is battling competitors who all need to spend growing amounts to get users to play their games and buy in-game merchandise and benefits.

Mathias Lundberg, an analyst at SEB AB in Stockholm, says Rovio isn’t converting “enough players to payers.” The company did well in the past two years, “but now seems to have hit the buffers,” he said in a client note. SEB cut its price estimate by 9 percent to 5 euros, and also slashed its target for earnings per share this year and next by more than 30 percent.

Angry Birds Has a Way to Halt Its Icarus-Like Descent: Gadfly

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