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Rovio Entertainment lost a fifth of its market value on Thursday after the Angry Birds maker swung to third-quarter losses in its first results as a public company.

Shares were down as much as 20.8 per cent to €9.36 in morning trading in Helsinki, as the Finnish gaming company said it had significantly increased spending on attracting new customers, pushing it to a pre-tax loss and to miss analyst expectations on revenue growth.

Rovio’s marketing costs were up by more than five times to €53.7m in the first nine months of the year, compared with €10.6m in the same period last year.

That helped push Rovio to a loss of €500,000 in the third quarter.

Group revenues rose 73.7 per cent to €223.2m in the nine months to September. However, the increase was much lower at 41.4 per cent in the third quarter.

“They have put a lot of effort into the marketing but it led to a poor result which was very disappointing. It remains to be seen whether they can recover,” said Aaron Kaartinen, analyst at FIM, the private bank. “I think the focus is on the gaming so that is where they have to do better.”

Rovio has been under pressure to prove that it can replicate the huge success of Angry Birds, which it released in 2009 and went on to become one of the most successful games of the smartphone era.

Richard Holway, chairman of TechMarketView, said the company’s future would depend on its ability to develop a second game as popular as its first. “This whole business goes on whether or not you can have a second game that is a hit,” he said. “If it costs you more to get a new user than that user is willing to spend on you, then that’s a very bad business plan.”

Kati Levoranta, chief executive, defended the company’s approach. “In line with our growth strategy, we significantly increased our investments in user acquisition, which predictably led to a decline in profitability,” she said.

She has insisted that the company is a “games first” business that employs 300 of its 376 staff to develop apps. But brand licensing — which includes leasing the Angry Birds design to theme parks and cuddly toy manufacturers — boosted growth in the first nine months of the year.

After a torrid few years in which Rovio saw off two chief executives and almost halved its headcount to 370, the group had a surprise hit last year with The Angry Birds Movie, which made $350m at the box office.

The company went public in September at the top of its projected price range, which valued it at €896m. That was far below the $2bn valuation some backers of the company had suggested a few months earlier.

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