Small and Mid-Cap Game Stocks Advance Amid Uncertain Market Conditions

Game Index Falls About 50% Since Early This Year
Neowiz, Com2uS Gain Momentum with New Releases and Rise

[Asia Economy Reporter Minji Lee] Amid continued pessimistic outlooks surrounding the gaming industry in the second half of the year, small and mid-sized gaming stocks are maintaining an upward trend fueled by new game momentum.

According to the Korea Exchange on the 7th, Neowiz's stock price surged nearly 30% over two weeks from the 23rd of last month to the day before. During the same period, Com2uS and DoubleU Games also showed increases of around 4% and 8%, respectively. Despite sluggish stock performance from large gaming companies such as Netmarble (-5%) and Pearl Abyss (-0.5%), small and mid-sized gaming stocks showed an upward trend.

The rise in Neowiz's stock price was also driven by new game momentum. Neowiz's new title, "P-ui Geojit" (The Lie of P), is a new IP in the "Soulslike" genre, known for its dark setting and very high difficulty, attracting strong interest from users as a niche game. It won three awards at the Gamescom Awards: "Best Action Adventure Game," "Best Role-Playing Game," and "Most Anticipated PlayStation Game," marking the first time a Korean developer has received such honors.

Although the release is scheduled for early next year, securities firms have already raised their sales estimates and adjusted earnings forecasts upward. The basis for this upward revision is that Bandai Namco's "Elden Ring," which won the same award as "P-ui Geojit" last year, sold 17 million copies within about four months after its release in February this year. Researcher Seok-oh Kang of Shinhan Financial Investment stated, "We have revised the one-year sales forecast across three platforms?PlayStation, Xbox, and PC?from 1.4 million to 2.5 million copies," adding, "Aggressive marketing is expected on PlayStation and Xbox, and considering sales of past award-winning games, the current estimates are conservative."

Com2uS is reflecting expectations for success in its stock price ahead of the global launch of the play-to-earn (P2E) model game "Summoners War: Chronicle" in November. After a domestic release on the 16th of last month, which yielded weaker-than-expected results, hopes for stock price gains seemed to fade, but analyses suggesting that the game could achieve better-than-expected sales in the global market have rekindled optimism. Hajung Kim, a researcher at Daol Investment & Securities, said, "The core market for the Summoners War IP is the Western region, so expectations for sales growth remain valid," and added, "Since the game has already been released domestically, the likelihood of delays is low, making a pre-release purchase strategy reasonable."

DoubleU Games, despite having no new releases, saw its stock respond positively as litigation risks involving its subsidiary disappeared. Over the past four years, its subsidiary DoubleDown Interactive (DDI) reached a $150 million settlement in a class-action lawsuit filed by users in a Washington State court, resolving additional legal risks. Furthermore, the rise in the won-dollar exchange rate increased revenue recognition in Korean won by 3-4%, which is also believed to have positively influenced stock performance due to improved earnings expectations.

This year, the gaming sector has been one of the hardest hit by the U.S. Federal Reserve's strong tightening stance, which caused rapid shifts in investor sentiment toward growth stocks. Concerns over earnings due to the lack of new releases and the disappearance of hopes for Chinese game approvals have further accelerated the stock price decline. In fact, the KRX Game K-New Deal Index has halved from 1,527.83 at the start of the year to 799.18, marking a nearly 48% drop since the beginning of the year. Jonghwa Sung, a researcher at Ebest Investment & Securities, said, "Gaming stocks have been continuously and repeatedly affected by external factors throughout the year, making it difficult to predict how long this trend will continue," adding, "Only some gaming stocks with anticipated new releases will achieve a rebound."

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