OTGLY - CD Projekt: What The Next Cycle Entails For This Great Company

2024-03-14 17:35:27 ET

Summary

• CDP experienced impressive quarterly growth (+80%), owing to the success of its recent Cyberpunk expansion. The company has returned to its winning ways.
• We believe its pipeline is developing impressively, priming CDP for an impressive end to the decade. Until then, however, we expect a quiet few years.
• The coming 2-3 years will likely be uneventful, with CDP’s financials stepping down until the next Witcher game. We suspect there will be limited positive price action during this period.
• CDP continues to outperform relative to its peers, even with far fewer releases. We believe this strong financial advantage can be maintained long-term.
• Even though CDP is undervalued based on our DCF, we rate the stock a hold due to the lack of catalysts and the limited activity expected in the coming 2-3 years.

Introduction and thesis

CD Projekt ( OTGLY ) ( Referred to as CDP throughout this paper ) is a renowned Polish video game development company known for its critically acclaimed titles, including The Witcher series and Cyberpunk 2077. The company is based in Warsaw, Poland, and has established a global reputation for producing high-quality and immersive RPG games. The Witcher series has sold over 75m copies and the Cyberpunk 2077 game has sold over 20m copies....

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