Krafton shares tumble 20% after trading debut

South Korean Krafton Inc., company behind the popular battle royale game PUBG, tumbled as much as 20% after debuting on the Korean Stock Exchange.

Reuters reported that analysts attributed the share tumble to an ‘expensive valuation’ and China regulation risks, with gaming companies facing uncertain prospects after China regulators have come down hard on a number of industries, upending norms with new guidance and rules. 

To recall, Krafton’s 4.3 trillion won ($3.8 billion) IPO, marking it as South Korea’s second-largest IPO, was subscribed 243 times by institutional investors after a regulator requested the company to revise its IPO registration statement last month following concerns that its valuation was too high.

Krafton shares opened down 9.9% from their IPO price of 498,000 won, making it South Korea’s lowest trading debut since LG Philips LCD, now LG Display, first went public in 2004, according to data from Refinitiv Eikon.

The stock closed down 8.8% from the IPO price, valuing the company at about $19.32 billion.

“About 70% (of sales) appear to be from Tencent,” LightStream Research analyst Mio Kato, who publishes on Smartkarma, told Reuters.