(Reuters) - Angry Birds maker Rovio Entertainment fell short of market expectations for quarterly sales and profit on Thursday, sparking a near 20% fall in the Finnish firm’s shares.
Increased marketing costs meant adjusted earnings before interest, tax, depreciation and amortisation were flat at €8.6m ($10.2m) in the third quarter, although sales rose 41% from a year ago to €70.7m.
“Costs were surprisingly big but also the number of paying customers lagged expectations,” Hannu Rauhala, an analyst at OP Equities, who has a “buy” rating on Rovio, said.
Rovio which was listed on the Helsinki bourse in September saw its shares drop to €9.48 by mid morning in Europe, a fall of 19.7% and well below its IPO price of €11.50.
“The company has changed a lot in the past years and it is considered as a growth company. The stock is strongly driven by growth expectations,” Rauhala said.
Rovio saw rapid growth after the 2009 launch of the original “Angry Birds” game, but it plunged to an operating loss and cut a third of its staff in 2015 due to a pick up in competition and a shift among consumers to freely available games.
Rovio’s game titles now include “Angry Birds 2”, “Angry Birds Blast”, “Angry Birds Friends” and “Battle Bay.”