The title Nacon is sanctioned these days, like the whole of the listed video game sector, in Paris as in New York. In recent days, the fall has been particularly severe: the stock collapsed by 17.5% on October 7, losing another 7.3% on October 10, in heavy trading volumes. Why ?
Nacon, publisher of video games and manufacturer of accessories, left the Enternext PEA-PME 150 index, which is not insignificant. Specialized “PEA-PME” funds then had to quickly place around 500,000 securities that were no longer eligible, in a narrow market, causing the stock market to plummet.
An unreliable list
In reality, the most surprising thing is that Nacon has never met all the criteria allowing it to claim its place within the PEA-PME! But the company had announced the opposite, during its IPO in March 2020, a simple error. It must be said that the characteristics of the PEA PME are often presented incompletely. Thus, the group met the first criteria: less than 5,000 employees, less than 1.5 billion euros in turnover or a balance sheet total of less than 2 billion euros and a market capitalization not exceeding one billion. . But another box must be ticked: No legal person should hold more than 25% of its capital “, can we read on the AMF website. However, Nacon is an offshoot of Bigben Interactive. After the 2020 split, the parent company owned 75% of its subsidiary (today it still owns 65.6%).
Eligible companies are required to communicate annually to confirm their status. Nacon’s management, having noticed the initial blunder, simply stopped communicating on the subject… but the stock continued to appear in the PEA-PME index, which misled the fund managers. It should be noted that, on October 13, Nacon still appeared in the ” list of listed companies having publicly declared their eligibility for the PEA-PME system “, on the site of the stock market operator. Euronext however took its precautions, specifying that ” this list is not an official list that can be relied upon in this regard. Verification of the effective eligibility of a company for the PEA-PME scheme is the sole responsibility of the investor. “. There lies an original weakness of the PEA PME: no one wants to take responsibility for the list of companies that can claim it!
Uncertain achievement of objectives
Nacon will publish its turnover for the second quarter on October 24. It should confirm the good trend of the first in terms of “back catalog”, that is to say sales of games launched in previous years. Between April and June, these represented 12.7 million euros (+39%), or nearly half of total video game sales. In the accessories section, sales of helmets are still expected to fall in a market that had been running at full speed during the confinements but turned around in 2022 (as evidenced by the poor results of the American specialist Turtle Beach).
However, game lags make it uncertain whether the annual objectives will be achieved (the long-awaited The Lord of the Rings: Gollum “slipped” from the first to the second half of the 2022-2023 financial year). Management has so far aimed for a turnover of more than 250 million euros and a current operating margin of more than 50 million euros.