Game Stocks 'Fluctuate' Ahead of Q2 Earnings Results

9 out of 11 Sectors Show Improved Performance Compared to Last Year
Netmarble, NCSoft, Neowiz Expect Double-Digit Operating Profit Growth

[Asia Economy Reporter Oh Ju-yeon] Game stocks, considered representative beneficiaries of non-face-to-face (untact) trends since the outbreak of the novel coronavirus infection (COVID-19), are experiencing stock price fluctuations ahead of their Q2 earnings announcements this year. Having witnessed the sharp rise in NCSoft's stock price following its record-breaking Q1 performance, attention is increasing on other companies expected to deliver similar results in Q2.

According to financial information provider FnGuide on the 6th, the operating profit for 11 stocks classified under the game software sector, as estimated by three or more securities firms, is expected to total 508.3 billion KRW in Q2 this year, a 52.23% increase compared to 333.9 billion KRW in Q2 last year.

Among these, nine stocks excluding W Games and JoyCity, which announced their earnings last month, are preparing for their Q2 earnings releases. JoyCity, which revealed a surprise earnings report on the 27th of last month, hit a 52-week intraday high, and W Games also closed higher the day after its earnings announcement. Attention is focused on whether the remaining companies awaiting earnings announcements will see their stock prices gain momentum depending on their performance improvements.

The company expected to show the largest improvement in operating profit compared to Q2 last year is Netmarble. Netmarble's operating profit for Q2 is forecasted to be 63.9 billion KRW, a 92.3% increase year-on-year. The strong Q2 performance is attributed to the revenue from 'A3: Still Alive,' released in March. Additionally, the global launch of 'The Seven Deadly Sins' contributed to overall growth. New titles are also anticipated to provide momentum in the second half of the year. 'BTS Universe Story' is scheduled for release in Q3, and 'A3: Still Alive' will be launched overseas.

The stock price has already reflected these expectations, continuing its upward trend since the beginning of this month. The closing price on the 3rd was 127,500 KRW, and by 9:40 AM on the same day, it rose intraday to 138,500 KRW, marking an 8.63% increase in just four days.

NCSoft is also expected to continue its operating profit growth in Q2 compared to the same period last year, following its strong Q1 results. NCSoft's operating profit for Q2 is projected at 239.5 billion KRW, up 85.1% from 129.4 billion KRW in the previous year. However, after reaching a closing price of 995,000 KRW on the 6th of last month following its Q1 earnings surprise, NCSoft's stock price has been somewhat subdued. On this day, NCSoft traded at 843,000 KRW, down 0.35% from the previous trading day.

Other companies such as Neowiz, Webzen, NHN, and Com2uS are also expected to show double-digit growth in operating profit compared to the same period last year. Neowiz's Q2 operating profit is forecasted at 13.5 billion KRW, a 46.7% increase year-on-year, while Webzen is expected to post 11.3 billion KRW, up 21.2%. NHN and Com2uS are projected to have operating profits of 29.4 billion KRW and 37.4 billion KRW respectively, representing improvements of 15.5% and 15.4% year-on-year.

Stock prices have also been volatile over the past week. Although Neowiz showed a slight decline of around 1% to 29,950 KRW as of 10:05 AM on this day, it rose 8.32% from 27,650 KRW on the 29th of last month. During the same period, Webzen's stock price increased 25.43% from 31,650 KRW to 39,700 KRW, and NHN's rose 6.75% from 81,500 KRW to 87,000 KRW.

Meanwhile, Pearl Abyss and Wemade are expected to report disappointing results, falling short of their Q2 operating profits from last year. Pearl Abyss's Q2 operating profit is forecasted at 40.1 billion KRW, a 29.5% decrease from 56.9 billion KRW in Q2 last year, due to declining sales of existing titles and underperformance of new releases. Wemade is also expected to post 1.9 billion KRW, down 32.4% year-on-year.

This content was produced with the assistance of AI translation services.