A screenshot from Star Wars Outlaws (2024), Ubisoft
A new report reveals that multiple financial analysts have downgraded Ubisoft’s stock with a number of them citing Star Wars Outlaws and predicting the game will “underperform expectations.”
Bloomberg reports that investment firm “BNP Paribas downgraded the stock to neutral on Wednesday.” The firm’s analyst Nicolas Langlet, who is described by Bloomberg as a “bull of Ubisoft Entertainment SA” downgraded the stock citing a crowded release schedule and increased competition including Grand Theft Auto VI.
According to the report, Langlet “cut his price target on the stock by more than half to €14.50, a new low among analysts tracked by Bloomberg.”
On top of Langlet downgrading the stock, Cantor Fitzgerald also downgraded Ubisoft’s stock.
Fitzgerald cited Star Wars Outlaws’ reviews and predicting the game will “underperform expectations.”
Financial analyst Valliant Renegade reacted to these analysts downgrading Ubisoft’s stock saying, “It’s going to get even worse.
He added, “Based on the Wall Street projection of what Ubisoft will have sold of Star Wars Outlaws by March of next year, by the end of March, six months from now, I’m betting that Star Wars Outlaws, today, September 11, 2024, has probably maybe not even broken 2 and a half million units.”
If that prediction is true that’s half of what Braclays’ Nick Dempsey predicted the company would sell based on Ubisoft indicating it would bring in around €500 million for the financial quarter that Star Wars Outlaws released in.
Demspey questioned Ubisoft CEO Yves Guillemot, during the company’s previous earnings report, “When I look at the guidance for Q2 and if I assume something similar for back catalog in Q2 as Q1 kind of getting to €200 to €230 million, that sort of range. For the new release Star Wars Outlaws, when I look at the $70 price and then assuming what you might get from it, I’m getting to around 5 million units, something in that sort of bracket. First of all, where could I be going wrong with that thinking? Secondly, are you just being pretty conservative in your guidance because I guess given the interest in that game we might have thought it would be more than 5 million units?”
Guillemot responded, “We can’t comment on the very numbers you are quoting. But what we have factored in is a strong launch for Star Wars Outlaws that reflects the fact that it is among the most awaited games of the industry this year and a really strong, positive community sentiment. And also, the fact, that we are coming with the biggest marketing campaign ever, so far, for [an] Ubisoft game. So that’s what we’ve been factoring in the second quarter.”
It does not appear that “strong, positive community sentiment” turned into actual sales. And Valliant Renegade later asserted, “Ubisoft is going under and I predicted this. … We’re approaching a bankruptcy thing or a buyout situation. And it looks like the buyout situation is coming into play.”
From there he cited AJ Investments that sent an open letter to the Board of Directors of Ubisoft urging the company to go private or sell to a strategic investor. In the letter, the investment firm specifically took issue with Ubisoft’s lowering of its revenue outlook for its second quarter, when Star Wars Outlaws released.
The firm wrote, “The recent quarterly results, which included the postponement of key games like Rainbow Six Siege and The Division into the 2025 lineup and a lowered revenue outlook for the Q2 2024, have heightened our concerns about the management’s ability to deliver value to shareholders over the long term. Share price of Ubisoft have decreased by more than 40% over the last year, compared to rise of its competitors and indexes.”
After detailing how they believe the company should be valued between €40 and €45, the firm posited the reason it is not there is due to current management, “Ubisoft at current state is mismanaged and shareholders are hostages of Guillemot family members and Tencent who take advantage of them. Management is focused on pleasing investors with beating quarterly results and not focusing on long-term strategy to provide exceptional experience for the gamers.”
As for why he believes the company will go bankrupt or be forced into a buyout situation, Valliant Renegade pointed to The Walt Disney Company, which owns Star Wars. He said, “The ‘woke’ is what has murdered this stuff. … It’s very simple. The Walt Disney Company … the same company that destroyed Marvel in Phases 4 and 5, the same company that has destroyed Star Wars since day one is the same company that is now destroying another partner out there.
“The Walt Disney Company has put an enormous amount of downward negative pressure on Hasbro because of the fact that they broke Marvel and they broke Stars Wars. And Hasbro is on the hook for billions of dollars in licensing fees for these toys that they can’t sell like Captain Marvel, like Ms. Marvel, and all this other trash that they had to spend a ton of money to produce. Same with new Star Wars, all the money they lose with Rose Tico dolls, Reva stuff, and all this crap. People don’t want it.
“That’s how woke breaks people,” he declared.
Still later, he noted, “This is where the ‘woke’ side comes in. Is that like many other Hollywood studios, television and film, and in this case game development studios have succumbed to the DEI ideology where they are just hiring people to fill a void.
He continued, “Because they can say, ‘Oh, we now have 30% of our game developers and our game writers and all this kind of other stuff are women.’ Sweet! Are they any good?”
What do you make of these financial analysts downgrading Ubisoft’s stock? What do you make of Valliant Renegade’s prediction that Ubisoft will go bankrupt or be forced to sell?