Looking for Real Risky Stocks? Try Social and Mobile Gaming

1
122
ipad game
ipad game
A man outdoors play in the game Asphalt 6 on Apple Ipad2. This second generation Ipad2 is designed and development by Apple inc. and launched in march 2011. Asphalt 6 is a very popular game, development by Gameloft.

Social and mobile gaming stocks have been the favorite whipping voice of many analysts. They consider these stocks as the foster children of excessive and irrational stocks speculation. For example, King Digital Entertainment (NYSE:KING) , the company behind the Candy Crush, has been shorted quite heavily by many speculators. They thought that the stock wasn’t really going to go anywhere, and that it’s built primarily on hype.

For sometime, it appears that the short traders were correct. In fact, the total float of King Digital Entertainment is around 30% short. That’s right—of all the total shares out there available for trading, 30% were sold high to be bought later at a lower price.

Well, it looks like this massive short exposure might end up exploding King Digital Entertainment if its stock continues to rocket higher. Thanks to its solid performance last quarter, it is issuing a solid guidance for the coming year. The interesting thing about short covering is that it’s like an avalanche: You don’t see it until it’s already underway. If there is a massive short cover for King Digital, expect the stock to pop convincingly.

It’s no surprise that while it is trading around 16,70, analyst consensus for this company is around $20. Some analysts are even saying that it can go higher. I suspect that $22 to $25 would be a fair target for this much maligned and little-understood stock.

1 COMMENT

  1. Its amazing how wrong the shorts are on this cash cow of a stock. Fair value seems to be around $30 USD. Now the lockup is over its ready to run.

LEAVE A REPLY

Please enter your comment!
Please enter your name here