[Into the Stock] 'Pearl Abyss' Won't Rise Until 'Red Desert' Is Released

Stock Price Drops Over 4% Early on the 17th
Plummets Over 25% in One Month

Red Desert Release Scheduled for Second Half of Next Year
Lack of Momentum to Boost Earnings

[Asia Economy Reporter Minji Lee] As the release of Red Desert is delayed, expectations for a rise in Pearl Abyss's stock price are plummeting. Amid concerns over a global economic downturn and weak investor sentiment toward the gaming sector, there are no positive events to boost the stock, leading experts to uniformly lower their outlooks.

According to the Korea Exchange on the 17th, Pearl Abyss's stock price has plunged 25.32% over the past month, falling to 40,700 KRW. Considering that the KRX Game K-New Deal Index dropped 20% during the same period, Pearl Abyss's decline is even steeper than the average. On an annual basis, Pearl Abyss's stock price has fallen about 70% from 134,000 KRW. On the morning of the same day, it dropped more than 4%, falling below 39,000 KRW.

The recent sharp correction in the stock price is due to news that the release schedule of 'Red Desert,' which was expected to reverse the stock's downward trend, has been postponed. According to the original plan, the release schedule was to be finalized in the fourth quarter of this year, and active marketing should have been underway by now, but there has been no news. Although the exact postponed date has not been disclosed, the industry expects the release to take place around the second half of next year (third quarter).

Jung Eui-hoon, a researcher at Eugene Investment & Securities, said, "At the beginning of this year, the company prepared three new titles: 'Black Desert China Mobile,' 'Black Clover Mobile,' and 'Red Desert.' However, due to the failure of Black Desert Mobile in China and delays in the release schedules of the other two games, both performance and stock price are struggling," adding, "The release of Black Clover Mobile is likely in the first half of next year, and Red Desert in the second half."

With new events that could boost earnings postponed until next year, it seems difficult to generate significant revenue in both the third and fourth quarters. The sales of Black Desert, which has been a solid source of income, are also gradually decreasing. According to securities firms' estimates, the average operating profit for the third quarter is 2.6 billion KRW, but some experts predict an operating loss of around 3 billion KRW. The average operating profit for the fourth quarter is 1.5 billion KRW, with the lowest estimate at -6 billion KRW. Jung Ho-yoon, a researcher at Korea Investment & Securities, analyzed, "While the growth potential of the mobile game market is generally slowing, a decline in sales of the Black Desert series has also been observed. The third quarter sales of Black Desert Mobile are expected to shrink by more than 31% compared to the same period last year, down to 17.9 billion KRW."

Experts are lowering Pearl Abyss's target stock price, citing a prolonged earnings gap. For example, eBest Investment & Securities adjusted its target price down by about 17%, lowering it to 45,000 KRW, close to the current stock price. Korea Investment & Securities, Shin Young Securities, NH Investment & Securities, and Samsung Securities have all issued neutral investment opinions. Sung Jong-hwa, a researcher at eBest Investment & Securities, evaluated, "It is difficult to resolve the earnings slump with the existing lineup, so this year's and next year's earnings will not drive valuation increases," adding, "We need to look at 2024 and beyond when Red Desert's sales are fully reflected."

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