Krafton’s New Release Fails, Drops Below Hyundai Development… "Only New Releases Are the Way to Survive"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Myunghwan] The downward trend of Krafton, the game development company that services the survival shooting game 'Battlegrounds,' is becoming serious. The decline is prolonged as it suffered the largest plunge in the KOSPI market since the new year, coupled with poor performance in the fourth quarter of last year.

On the 11th, Krafton closed at 259,000 KRW, down 12.79% (38,000 KRW) from the previous trading day. The securities industry analyzes that the poor performance last year led to the stock price decline on that day. The company's sales and operating profit in the fourth quarter of last year were 444 billion KRW and 43 billion KRW, respectively. Compared to the previous quarter, sales decreased by 14.9% and operating profit by 78%, recording results significantly below market expectations. Looking at the annual performance, the consolidated operating profit for last year was provisionally estimated at 639.6 billion KRW, down 17.3% from the previous year.

The failure of the new mobile game 'New State,' released in November last year, was fatal, according to the securities industry. According to Korea Investment & Securities, New State's sales in the fourth quarter of last year were 18.2 billion KRW (daily sales of 360 million KRW), significantly lower than market expectations. The market initially expected daily sales of New State to exceed 3 billion KRW. Researcher Jung Eehun of Eugene Investment & Securities analyzed, "The poor performance in the fourth quarter should consider that due to the genre characteristics of New State, the timing of revenue recognition is somewhat delayed, and that one-time costs were included during the seasonal off-peak period, but a downgrade of the premium on Krafton's existing strength, the Battlegrounds IP, seems inevitable."

Krafton has even earned the stigma of being the stock with the largest decline rate in the KOSPI since the new year. According to the Korea Exchange, Krafton's stock price fell from 460,000 KRW at the end of last year to 274,500 KRW on the 28th of last month, a 40.33% drop in just one month. This was the highest decline rate in the KOSPI during that period, exceeding the drop of HDC Hyundai Development Company, which caused a major collapse accident in Gwangju. During the same period, HDC Hyundai Development Company's stock price fell by 36.9%. This month, the stock price decline has further widened, with Krafton's decline rate compared to the end of last year expanding to 43.7% as of the 11th.

Securities firms have consecutively lowered their target prices for Krafton. Samsung Securities downgraded its investment opinion on Krafton to 'Hold' and lowered the target price by 26%, from 450,000 KRW to 330,000 KRW. NH Investment & Securities maintained a 'Buy' rating but lowered the target price by 21%, from 570,000 KRW to 450,000 KRW. Meritz Securities maintained a 'Buy' rating and lowered the fair price by 19%, from 680,000 KRW to 550,000 KRW.

However, there is also analysis that new releases this year could improve Krafton's performance. Researcher Lee Ji-eun of Daishin Securities said, "Krafton plans to release a new IP game from Unknown Worlds in the first half of this year and the PC survival horror game 'The Callisto Protocol' in the second half. Both games are developed by game companies with global references, and are expected to contribute to Krafton's performance improvement and expansion of game IP."

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