Shares in Ubisoft Plummet After Financial Guidance Slashed

Shares in Ubisoft Entertainment (EPA:UBIP) fell by over 16% during mid-morning European trading on Thursday after the French video game maker reduced its financial outlook.

Revised Financial Projections

In a statement published late Wednesday, Ubisoft announced it now expects net bookings of approximately €1.95 billion for the 2024-2025 fiscal year, a decrease from earlier projections. The company anticipates second-quarter net bookings between €350 million and €370 million, down from an earlier estimate of €500 million.

Reasons for Guidance Reduction

The decline in forecasts reflects Ubisoft’s decision to delay the much-anticipated release of the latest installment in the popular “Assassin’s Creed” series and the lackluster launch of “Star Wars Outlaws.”

Ubisoft, a family-owned company, has been relying on these game releases to counterbalance a recent streak of underperformance, which resulted in four consecutive years of negative cash flows.

The release of “Assassin’s Creed Shadows” has been postponed from November 12 to February 14, with “Star Wars Outlaws” receiving a lukewarm reception from gamers.

Management’s Response

“Our second-quarter performance fell short of our expectations, prompting us to address this swiftly and firmly,” CEO Yves Guillemot stated. He recognized the necessity for better efficiency and a player-centric approach, emphasizing an internal review to enhance execution and improve strategic performance for stakeholders and shareholders.

Analysts’ Perspective

Analysts at BMO Capital Markets noted that Ubisoft’s updates provide clarity into the company’s plans, helping to reduce long-term risks associated with the stock. They maintained an “Outperform” rating for Ubisoft but lowered their price target from €22 to €20.

(€1 = $1.1145)