Krafton, the South Korean game maker behind global smash hit PlayerUnknown’s Battlegrounds, suffered a disappointing market debut upon its landing on the country’s benchmark Kospi Tuesday, although it drew wide attention at home and abroad as the second largest in value in initial public offering market history here.

Shares of Krafton closed at 454,000 won ($395.10), up 1.23 percent from its opening of 448,500 won determined between 8:30 a.m. and 9 a.m. in its first trading session. The closing price was still, however, down by 9 percent from its initial public offering price set at 498,000 won. The opening price was also set nearly 10 percent lower than its IPO price.

The stock showed a wide fluctuation, once plunging as low as 400,500 won and rose up to 480,000 won during the day. The shares slumped during most of the trading hours but toward the end of the session, it entered positive terrain.

Despite the lackluster performance, the firm’s market capitalization stood at 22.2 trillion won at the closing bell, turning into the Kospi’s 19th most-valued stock, excluding preferred stock. The figure far outpaced other gaming giants NCSoft and Netmarble of 17.89 trillion won and 11.56 trillion won, respectively.

Daily trading volume of the game maker shares was worth 2.23 trillion won, about 10.5 percent of the total transactions made on the main bourse market on the same day. But the investors’ active trading could not boost the gaming label’s stock enough on the first day of its trading.

Market insiders cited the major reason for Krafton’s disappointing stock market debut to its “overrated” valuation issue. The company’s stock price movement on the first day of going public was “not surprising” as lukewarm responses showed by both institutional and retail investors during the earlier subscriptions, they said.

The game developer reduced the size of its IPO deal by lowering the pricing band to between 400,000 won and 498,000 won, from the previous 458,000-557,000 won range and the number of new shares to issue to some 8.65 million shares, instead of floating 10 million shares. It was followed by criticism from financial authorities amid overvaluation concerns. 

However, the revision failed to calm the “overrated” valuation controversy among investors. Aiming to raise up to 4.31 trillion won, Krafton held a book building last month, where it priced the IPO at the upper end of the target price band of 498,000 won per share. Competition among domestic and overseas institutions came to 243 to 1, far less competitive than other blockbuster deals that recorded the rate of more than 1,000 to 1.

Contrary to the expectation of attracting some dozens of trillions of won from investors during its retail tranche afterwards, the actual bids placed during the process marked 5.04 trillion won, while the shares being oversubscribed on the average of 7.79 times. Yet the deal was referred to as the “last train” to place multiple subscriptions for retail investors.

“Krafton’s market cap after listing was predicted at 24.4 trillion won based on its IPO price. The valuation was about 27-30 times of its price-to-earnings ratio for this year, which placed a premium of 30-40 percent than (other gaming labels) Nexon and NCSoft,” said Kim Hyun-yong, an analyst at Hyundai Motor Securities.

“Considering the facts that the ratio of institutions who agreed to keep their shares for a specified period of time was low and tepid responses showed during public subscription, investors who had valuation pressure were forecast offloading their shares as soon as the stock became tradable. ... If the stock price adjusts to below 400,000 won per share, new investors’ strong buying will be expectable.”