THQQF - Ubisoft: Not Expecting Much In Q4 Risks On The Horizon For 2025

2024-03-19 04:13:44 ET

Summary

• Ubisoft and Embracer are both terrible performers for some years and worth studying. We see a recent history of poor handling of otherwise attractive IPs, and greedy practices.
• Ubisoft is hyping up the Q4 on the back of Skull and Bones, which has not been received well. They are also putting their chips on another live service shooter.
• Their investment areas of live service are saturated, risky and could go low ROI. We don't think there is much chance of positive news in the Q4.
• Boycott risks are somewhat remote but could be dangerous, and should be watched carefully.
• There isn't a major valuation case, and we'd maybe just go with more solid companies in the space that have comparable valuations, or even bottomfeeding with Embracer.

We've noticed in our coverage that there has been exceptionally poor performance of some of gaming's largest franchises since the 2021 boom, but also since before the pandemic. Therefore, some of it can of course be explained by slowdowns in performance from when COVID-19 made a captive market for gaming companies, the factor that probably comes in for the stalwarts like Electronic Arts ( EA ) and Take-Two ( TTWO ), but it also comes down to the fact that there has been a lot of franchise fatigue going on, and IP handling has been poor in some cases. For some of these companies, this is an incredible fall from grace, since many are in control of flagships that dominated the space for years and could have easily been the font of great sequels and spinoffs for much longer and more vigorously than they have been....

For further details see: