Ubisoft Shares Plummet as "Star Wars Outlaws" and "Xdefiant" Fail to Impress Investors - What This Means for Your Portfolio
By Alban Kacher
(Multibagger) - Ubisoft, the renowned French video game maker, faced a second consecutive day of declining shares on Tuesday, triggered by the underwhelming performance of its latest releases, including the highly anticipated "Star Wars Outlaws."
The stock, which had already dipped by 5.1% on Monday, fell another 2.4% by 1114 GMT, marking its lowest point since 2015. This extends the company's year-to-date drop to over 30%.
Key Drivers of the Decline
1. Poor Reception of "Star Wars Outlaws"
- Released last Friday, "Star Wars Outlaws" has not met market expectations, despite positive critical reviews.
- Midcap Partners analyst Charles-Louis Planade noted the game's user score on Metacritic stands at a dismal 4.9 out of 10.
2. Underperformance of "Xdefiant"
- Ubisoft’s free-to-play game "Xdefiant" initially garnered interest but has since seen a significant decline in Twitch viewership.
- The game’s impact on Ubisoft’s financial performance is expected to be minimal in the upcoming quarters.
Financial Implications
Ubisoft has faced four years of negative cash flows due to game cancellations and delays. The company had pinned hopes on the success of "Star Wars Outlaws" and the upcoming "Assassin's Creed Shadows" (scheduled for release on November 15) to reverse its fortunes.
CFO Frederick Duguet stated in July that the launch of "Outlaws" was expected to boost net bookings for the July-September quarter. However, this seems increasingly unlikely given the game's sluggish sales.
J.P.Morgan Analyst Daniel Kerven highlighted that:
- "Star Wars Outlaws" had a development budget at least 30% higher than "Assassin's Creed Mirage," which was launched last year.
- The game is underperforming "AC Mirage" by about 15% on Twitch.
- Sales expectations for "Outlaws" have been reduced by 2 million units to 5.5 million units through March 2025.
Market Reactions
The tepid reception of these key releases has shaken investor confidence. Ubisoft's share price reflects this uncertainty, plunging to its lowest level in nearly a decade. The company has yet to comment on the performance of these games.
Breaking It Down: What This Means for You
In Simple Terms:
- Ubisoft's Stock Drop: If you own Ubisoft shares, your investment has lost value because the company's new games didn't sell as well as expected.
- Why It Happened: The games "Star Wars Outlaws" and "Xdefiant" didn't impress players, leading to poor sales.
- Financial Strain: Ubisoft has struggled financially for a few years, and these games were supposed to help turn things around. Their failure means the company continues to be in a tough financial spot.
- What to Watch: Ubisoft is relying on another game, "Assassin's Creed Shadows," set to release in November. If this game also fails to perform, expect further stock declines.
How It Affects You:
- Investors: If you hold Ubisoft shares, consider the risk of further declines and weigh your options.
- Gamers: Poor game performance might lead to fewer titles being released or delayed in the future as Ubisoft reassesses its strategy.
- Market Watchers: This situation underscores the volatility of investing in entertainment and tech stocks where product reception can significantly impact financial outcomes.
Understanding these dynamics can help you make more informed decisions about your investments and expectations from the gaming industry.