UBSFF - Ubisoft: Dip Buying Despite Bookings Disappointments

2024-06-05 11:45:26 ET

Summary

• Ubisoft traded down due to weak guidance, but the dip-buying activity isn't so crazy with good early reports about XDefiant.
• However, the weak guidance makes us think some of this year's releases don't have staying power, specifically Skull and Bones.
• While the back catalog is doing great, there's concern about releases for next year.
• There's a lot of pushback from gamers about Assassin's Creed: Shadows and Star Wars: Outlaws over pricing but also perceived political messaging.
• We think that these are both major franchises that have a chance at a huge draw in a mammoth FY 2025 for Ubisoft, but we also see a boycott risk, so we stay away.

Ubisoft ( OTCPK:UBSFY ) fell pretty dramatically close to the recent historic lows after its earnings call on disappointing figures and guidance, something which was pretty easy to predict given our previous coverage . We're not convinced by the release's comments on Skull and Bones , and think that the project has been a bust, with others holding the fort. We also note that it's probably the back catalog doing the heavy lifting. The guidance falling under expectations seems to have been the main reason for the poor earnings day performance....

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