Candy Crush maker King sinks below IPO price

King Digital, the maker of the wildly popular video game Candy Crush, fell below its IPO price in initial trading Wednesday on the New York Stock Exchange.

King opened at $20.50 a share, below the company's public offering price of $22.50.

The shares fell as low as $19.17 before rebounding to $19.80in late morning trade, 12 percent below the subscription price.

King raised $500 million Tuesday from the sale of 22.2 million shares, and the shares trade under the ticker "KING".

Established in 2002, King's business has soared in the last two years thanks to the spectacular popularity of Candy Crush Saga, which boasts some 97 million players worldwide.

The business makes money from players buying hints and other help to aid their climb through some 500 levels of the Tetris-like game.

But some analysts have questioned King's staying power on the back of a game whose popularity could wane over time as users tire of it.

The company's follow-up games have not attained the same level of popularity.

"The only way to find a hit is to launch many games," King Digital chief executive Riccardo Zacconi told CNBC, explaining the company's strategy.

"It's a question of time," he added.

The company says its games, which also include Farm Heroes and Pet Rescue, are installed on 600 million mobile devices, and played over 1.4 billion times a day -- more than one billion alone for Candy Crush.

Profits in the fourth quarter reached $159 million.

The King IPO comes amid a sharp uptick in new companies entering the market.

The US IPO count stood at 46 through March 11, the highest level for this time of year since 2007, according to Dealogic.

King's arrival comes as investors are keen to buy into the next rising technology star but are wary of young companies being overvalued, especially in the world of games where popularity can be fleeting.

Some analysts also fear that the rush of IPOs may signal an overvalued market similar to the tech bubble that burst in the early 2000s.

Zynga, creator of the once-mighty "FarmVille" game, lost 40 percent of its value after entering the market in December 2011 with a valuation of $7 billion.

King said in a securities filing that it believes it has a "repeatable and scalable game development process that is unparalleled in our industry."

"A key principle for King is that no individual game session should take more than a few minutes," Zacconi said in the filing.

"We call it bitesize brilliance -- the perfect way to spend three minutes of free time."

King said the proceeds from the IPO would go for "general corporate purposes," possibly including acquisitions.