Update 11/27/2017:Niantic has just raised $200 million in a round of funding according to The Wall Street Journal. This comes after the company raised about $30 million more than a year ago, before its release of Pokemon Go. Niantic is also on record saying that it is developing a new mobile augmented reality game based on the Harry Potter franchise. There has been no news at all about whether Niantic has any plans for an IPO and this latest funding gives it a lot of time to develop games and operate on its own without the need for going public.
Augmented reality game Pokemon Go has been all the rage in 2016 and I’m sure many investors would buy Niantic stock if they could. But being a private company that was formed inside Google in 2010 and then spun off from it in 2015, it will be awhile before Niantic has any thoughts of having an IPO. It is still a relatively small company that has a lot of growing and success that needs to be met before it can offer stock to the public.
Niantic’s main investors/owners are Nintendo, Google, and The Pokemon Company, those three having collectively put in what will amount to at least $30 million. Niantic has also gotten an additional $5 million in 2016 from a few smaller investors and has added some key strategic people to help guide the company.
Niantic Is A Mobile Game Company
If you are thinking of buying Niantic stock if/when it goes public, it might be a good idea to see how other recent mobile gaming companies stocks have performed. There are three notable ones: GLUU, KING, and ZNGA.
GLUU: Glu Mobile IPO’d in 2007 at $11.50 and has spent almost all its time since then below that price. The stock has traded as low as 25 cents per share in 2008 and today (9/18/2016) trades at $2.22.
KING: King Digital Entertainment was most famous as the maker of Candy Crush. But the stock never crushed it as it listed its IPO at $22.50, started trading the first day at $20.50, and closed that first day at about $19 per share. In its short history, the stock traded down mostly from there going as low as the mid $11’s before being bought out by Activision for $18. In order to have made money from KING, you would have had to have been a trader who bought and sold the stock at just the right times.
ZNGA: Zynga is most famous for the creation of FarmVille and had its IPO in December 2011. The stock was offered at $10 per share and briefly topped $14 per share a couple of months later. But from that point on the stock went straight down and trades today (9/18/2016) for just $2.91 per share.
Clearly, the stocks of other mobile game companies have NOT done well since they went public. One of the big problems is the need for such companies to continually come up with hit games which is VERY difficult to do. Investors need to see that a company will continue to increase sales and that means more and more hit games are needed to keep the stock moving up.
Will Nianitc, should it ever go public, be able to keep cranking out the hits? That is an important question that needs to be answered by anyone who is interested in buying the stock.
Niantic’s Future Prospects
While Pokemon Go was a major breakout hit, Niantic can only take that franchise game so far. The buzz has died down now, as has the number of players that are playing it. Niantic will try to update it with things such as player battles and more creatures to prolong its fun factor but that can only last so long.
For the company to grow big enough and profitable enough to go public, it will need to continue to release exciting games and maybe even new technologies. Investors won’t want to buy Niantic stock unless they can clearly see evidence that the company will continue breaking new ground and operating at a high level of profitability.
Ninantic CEO John Hanke has said that he hopes to further develop the companies augmented reality platform so that it can be used for other games and perhaps even other projects. This is something that is absolutely necessary for it to do if it wishes to be an investible stock one day.