‘Angry Birds’ maker Rovio pummeled after profit warning

Angry Birds game maker Rovio Entertainment warned on profits on Thursday, wiping more than a third off the Finnish firm’s stock cost amid deepening doubts about its valuation.

Investors within the company behind the Angry Birds games as well as movie franchise have had a rocky ride since last year’s initial public offering of Rovio, which blamed increased marketing costs as well as various other investments for the lower profit outlook.

Rovio forecast its 2018 operating margin at 9-11 percent versus 10.6 percent in 2017 as well as said the item expected sales of 260-300 million euros versus 297 million last year. This particular was below analysts’ forecasts of a margin of 14.5 percent as well as sales of 336 million euros, according to Thomson Reuters data.

Rovio saw rapid growth after the 2009 launch of the original “Angry Birds” game, in which players used slingshots to attack pigs who stole birds’ eggs. nevertheless the company plunged to an operating loss as well as cut a third of its staff in 2015 due to tough competition as well as a shift to games available for free.

Shares in Rovio were down 39 percent to 6.07 euros by 0850 GMT. In November, the stock dropped by about 20 percent after Rovio’s first interim report as a listed company.

“Competition within the mobile game industry is actually very tough as well as user acquisition has become more expensive for the companies,” said Atte Riikola, analyst at Inderes Equity Research.

He said expectations may have been too high at the time of Rovio’s listing, which valued the item at $1 billion euros.

“The mobile game industry is actually very hot, the item is actually believed of which there’s a lot of growth ahead. nevertheless the sector may be overinvesting at the moment,” Riikola, does not have a rating for Rovio stock, said.

Rovio had bounced back in 2016 using a help of its 3D Angry Birds movie for which the item is actually planning a sequel. Its game titles currently include “Angry Birds 2,” “Angry Birds Blast”, “Angry Birds Friends” as well as “Battle Bay.”

Fourth-quarter operating profit at Rovio more than doubled to 10.4 million euros on revenue up 17 percent to 73.9 million euros ($0.6 million). The company is actually due to publish its full interim results on March 2.

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