This time last year, CD Project SA was among the European ones the hottest stocks, riding on the wave of demand for pandemic games and on the way to a record high before the release of the studio’s anticipated game Cyberpunk 2077.
Rewinding forward by 12 months, stocks are the worst in the region in 2021, down 63% from the August record, and the company faces questions about how it plans to address issues with the failed release of a game full of bugs.
It is these difficulties that will be in focus on Thursday when the CD Project reports on a year that included the creation, release and the disappointment of an exhausted title. Although preliminary data showed an increase in earnings on Cyberpunk’s initial sales, the main focus will be on any trading update for this year and comments on how the studio will address a catalog of failures that managed to turn a potential hit into a cause of falling stock prices.
“There is still a higher risk of rewards for CD Project owners because without a visible improvement in player ratings, the studio will not be able to provide strong sales for this year,” Ipopema Securities SA analyst Michal Wojciechowski said by phone. “While some retailers may be looking for a tactical advantage, we still don’t know if the studio will be able to quickly improve its key franchise, and the next games are scheduled far in the future.”
Starring Keanu Reeves, Cyberpunk 2077 is a complex futuristic role-playing game that it was predicted that the stormy world would take over when it was launched on December 10, but shortly thereafter players reported multiple bugs, sparking negative reviews and launching an unprecedented Sony Corp. the decision to remove the title from its PlayStation store.
A The strategy update late last month failed to address concerns about how the Polish company will make the turnaround, showing only that Cyberpunk was not yet ready for full multi-a version of the player that could restore his popularity. It also left questions unanswered when the CD Project will be ready with an updated version for next-generation consoles.
Thursday’s results, expected after the market closes, should shed more light on a A 9% loss of revenue, the company reported in preliminary figures late last week. The key number for analysts will be how many copies of Cyberpunk were sold last year and whether it contributed to the failure. The average estimate of the ten analysts surveyed by Bloomberg is 14.5 million units, reflecting strong pre-orders that allowed CD Project to report quarterly net income on a scale comparable to total profit over the past five years.
An increase in profits could cause the company to sweeten the blow to shareholders in recent months by proposing a dividend, something that was once avoided. Estimates indicate a potential payout of 5 zlotys per share, which is equal to a dividend yield of 2.7%.
But it will probably be as good as it gets. Reflecting the current uncertainty, Cyberpunk’s sales estimates in 2021 range from 4 to 17 million units, with an average projection of 10.8 million units. These budgets depend on how quickly the game can return to the Sony PlayStation store and make it available for next-generation platforms.
“Any new data on Cyberpunk sales this year would be useful to achieve greater clarity, as we all know that first-quarter sales are disappointing,” said analyst Wood & Co. Maria Mickiewicz by email.
CD Projekt declined to comment on the results.
Analysts are confused about the prospect of stock recovery, and recommend selling more than buying, according to data collected by Bloomberg.
“It would take a serious positive shift in unit sales for Cyberpunk 2077 and a return to the engagement of current owners” to restore faith, said Matti Littunen, an analyst from Bernstein. “In other words, solid data proves there’s a lot of franchise value left.”
Here’s a look at the flashes in the wild year of the CD Project:
- April 3, 2020: CD Project becomes the most respected company listed in Warsaw, and the shares become the winner of the pandemic
- August 27: Stocks fly to record highs ahead of the release of Cyberpunk
- December 8: Stocks fall 7.1% as initial press reviews fail to meet high title hopes
- December 10: Cyberpunk launches with 8 million copies sold in pre-orders, but shares fall an additional 8.5% as players report a number of errors
- December 18: Sony pulls Cyberpunk out of PlayStation Store, dropping stock to lowest level since March
- March 29: The studio released a major patch to fix nearly 500 bugs
- March 30: Updating strategy does not provide clear path for franchise repair, pushing inventory to two-year low
- April 15: Shares fall to a 13-month low after the company unexpectedly releases preliminary data for FG2020, delaying the full report for 4 days