The maker of Angry Birds has disappointed investors using its first earnings report as a public company.
Rovio shares fell above 20% on Thursday to trade at €9.45 ($11.20) on the Nasdaq Helsinki. That’s well below their IPO value of €11.50 ($13.60) from October.
The Finnish gaming firm said in its results that sales were up 40% in the third quarter.
But costs also increased dramatically, with €22.2 million ($26.3 million) being spent on a drive to attract fresh users.
The splurge — which was four times more than the same period in 2016 — cut into the firm’s profits.
Rovio posted a €500,000 ($600,000) damage before tax found in the quarter, in comparison to earnings of €4.6 million ($5.4 million) this past year.
Investors weren’t pleased. But Jack Kent, principal cellular analyst at IHS, said Rovio was to invest in securing new users.
“Such a approach is necessary for Rovio’s long-term strategy to increase the overall monetization of its game titles, [an] area where it had lagged behind its rivals despite good download victory,” he said.
Related: Angry Birds IPO does not take off
Angry Birds has been downloaded above 3.7 billion moments. But investors come to mind about Rovio’s ability to turn out new hit games.
Other gaming companies serve as cautionary tales.
King Digital Entertainment, the business lurking behind Candy Crush, was purchased this past year by Activision for $18 a talk about — 20% bellow its IPO price.
The 2011 IPO of Zynga, the maker of game titles like Words with Friends and FarmVille, has also ended up being a disappointment. The business didn’t deliver popular new game titles and lost millions of users. Its share value has fallen from $10 to roughly $4.