(BFM Bourse) – The video game publisher is losing ground to the Paris Stock Exchange, penalized by the plunge of Frontier Developments, another London-listed publisher which has abandoned its 2023 financial targets.
Difficult start to the week for Ubisoft. Down 4.4%, the title of the French video game publisher posted the largest drop in the SBF 120, penalized by the heavy decline in its comparable Frontier Developments. The latter plunges by 40% on the London Stock Exchange, investors on the other side of the Channel sanction the abandonment of the financial objectives of the publisher and developer of British video games for the current year.
“This is the only news likely to explain the drop in price,” said a financial intermediary interviewed by BFM Bourse.
Frontier Developments throws in the towel. The British video game publisher was forced to adjust its financial forecasts due to weaker than expected sales of F1 Manager 2022 – its game released last August allowing its user to be the boss of his own team – during the key holiday season.
Sales below expectations
More generally, it is the entire portfolio of games (Elite Dangerous, Planet Coaster, Jurassic World Evolution 1, Jurassic World Evolution 2 and Planet Zoo) that posted sales below expectations during the holiday period. “Despite the promotions carried out last December, the sales achieved were lower than expected, illustrating the increased sensitivity of players to prices” indicates Frontier Development. In addition, the group points to an uncertain contribution from its Foundry entity, due to the lack of a game launch scheduled for 2024.
Thus, the management is giving up on its 2023 objectives. The group had until then aimed to generate a turnover of 135 million pounds sterling and an operating profit of 19 million pounds sterling for the current year.
Frontier Developments now expects a turnover of at least 100 million pounds sterling for the financial year 2023. A level of sales which would then make it possible to externalize “an operating margin of around 2% operation of around £2 million),” the company adds.
A sluggish start to the year on the stock market
The earnings warning from Frontier Developments falls to the worst for Ubisoft, already well tested by an analyst degradation at the end of last week. On Thursday, Bank of America drastically reduced its target price on Ubisoft from 31 to 20 euros while reiterating its opinion of underperformance on the file.
For the financial intermediary, the objectives communicated by the company for its 2023/2024 financial year, namely double-digit growth in sales and a significant improvement in its operating profit, are according to him “still too ambitious”. The design office also recalls the “unflattering record” displayed by management in terms of achieving its objectives.
The title had then lost 3.5% last Thursday, then 4.3% the next day, in reaction to this note from Bank of America which is far from being to the advantage of the video game publisher. With the drop of the day, Ubisoft lags behind by 6.6%, the gains made at the start of the week having made it possible to limit the damage a little.
Sabrina Sadgui – ©2023 BFM Bourse
Are you following this action?
Receive all the information about UBISOFT ENTERTAIN in real time: