Employees Of Kabam Allowed To Sell Stocks

Employees Of Kabam Allowed To Sell Stocks

Stocks of the videogame maker, Kabam, were sold by early investors and employees for the second instance in less than two years. The San Francisco-based company gave the go signal even as it did not profit from the sale.

The company, which has a current value of over $1 billion, is famous for games like Creature Academy and Kingdoms of Camelot. Stock sales are normally regulated until the IPO of a company to limit the number of investors and prevent issues with regulators. Due to this, employees aiming to cash in have resorted to sell stocks in secondary markets.

However, this practice is not supported by everyone since these markets are normally unregulated and do not provide any information about the companies. Valuations are also artificially inflated in these markets. Silicon Valley venture capitalist Ben Horowitz indicated that investors only have an idea of the product and may not know the number of shares a company has.

Since Kabam has not yet released its IPO, it has invested without having to release quarterly earnings or securities filings. The company is among a small number of videogame makers that have yet to go public. The experience of Zynga and King.com may discourage the company from pursuing an IPO in the near future.

The chief executive officer of the company, Kevin Chou, recognized the fact that the eventual IPO of the company may be affected by the struggles experienced by Zynga when it went public. Similar to Zynga, King.com also struggled in the market as the value of its stock went down by around fifty percent before it recovered.

The videogame maker received a vote of confidence from Alibaba, which indicated that it will purchase a ten percent stake for $120 million. The biggest internet company in China and Kabam also agreed to publish ten games in China.

Posted by James Fried on Monday January 19 2015, 4:00 AM EST. Ref: CNET. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0