Polish gaming indicates the beginning of a new boom? CD Projekt’s shares have increased nearly 80% since June!

Dov Herman

3 years ago

The gaming industry is returning to favor again, and the WIG-Gry index continues the index started in June this year. reflection. Although it is still far from the popularity records of autumn 2020, another great week by the five largest video game producers on the WSE: CD Projekt (+ 3.68%), Creepy Jar (+ 3.53%), PlayWay (+0 , 52%), 11 Bit Studios (+ 3.38%), and Ten Square Games (+ 5.69%) suggest that the rebound is of a structural nature and is not due to the better behavior of an individual company alone.

WIG-Gry follows the improvement of sentiment on the Warsaw Stock Exchange

The past week was marked by a strong rebound on the WSE, as well as the appreciation of the Polish currency. The euphoria on the Chinese stock exchanges also translated into European sentiment, which was the result an increase in the WIG20 index by over 6%, thanks to which the representatives of the Polish Gaming caught the wind in their sails.
Out of 19 companies that make up the WIG-Gry sub-index, as many as 13 ended the past week with a significant strengthening, and the growth leaders included companies such as: Projekt, Creepy Jar, 11 Bit Studios, Ten Square Games, and BoomBit.
WIG-Gry Source: TradingView Also from mid-June this year. WIG-Gry managed to strengthen by nearly 45%, thus breaking the downward trend lasting from the ATH established in November 2020 at the level of 35,000 points. In addition, the quotes broke from the consolidation zone between 12,000 and 14,000 points and started a new upward trend, taking advantage of the significant improvement in sentiment and the Halloween effect, which is statistically the best time to buy shares.
We explained what the Halloween effect is in the previous article, to which we cordially invite you!

CD Projekt may start a new rally

The Polish stock exchange has had extremely difficult months behind it, and the current conditions in the form of high inflation, energy crisis, weakened zloty or armed conflict in Ukraine are not conducive to stocks. Moreover, most likely this Wednesday we will face another interest rate hike by the MPC, after the y / y inflation dynamics in October reached 17.9 percent, and m / m 1.8 percent.
This may also interest you: Inflation has picked up again! This is almost 18%. Prices are rising the fastest in 26 years
Thus, investors are hungry for a long-awaited rebound, the first symptoms of which may be shown CD Projekt, a company that bounced almost a 5-year low at PLN 77 by almost 80% (exactly 77.28%) in just 2 months.

CD Projekt Stock Quote Source: TradingView It cannot be denied that with October announcing five new games in the Witcher universe investors re-believed in the possibilities of the Polish company. In addition, for Christmas, Netflix announced the premiere of the series set in the world of The Witcher, which should also affect the popularity of the game and, in the short term, the share price. However, this impact will be limited, as the company’s biggest bestseller premiered seven years ago, and the announced addition to Cyberpunk is unlikely to change the mixed opinions of players. Although CD Projekt is the Witcher, so in the update of CD Projekt’s strategy we read, among others about plans to pursue three “unique, strong and sustainable” franchises. The studio intends to stay with the Witcher universe (5 new games and a remaster of the first part), further develop Cyberpunk 2077, and create something new, so far it is called the enigmatic Hadar Project.
Management also announced the opening of a new studio in North America, the addition of a multiplayer to most future projects, and the further expansion of the franchise to film and television.
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START INVESTING M. Kietliński, XTB expert, however, believes that in order for the quotes to think about a new ATH, a premiere similar to The Witcher 3 will be needed, which will delight players all over the world, and not only loyal fans, as Cyberpunk did. – A major launch is needed to change the global sentiment towards the company’s stocks. Now is the moment for the company to buyback, as historically its share price is now low. The share buyback is carried out at relatively low costs and coincided with the publication of the new strategy, which has already contributed to the increase in the company’s quotation – argues the XTB expert. The company will therefore implement the new strategy without a new share issue. However, it is already buying its own shares and is approaching the resistance of PLN 150.

Creepy Jar, Ten Square Games and BoomBit suggest a shift in market sentiment

As is well known, Polish gamedev is not only CD Projekt, but also smaller gaming companies, which significantly improved their results in the last six months, are behind the current reflection.
Creepy Jar in the first half of the In 2022, it recorded a net profit of PLN 18.59 million, compared to PLN 12.06 million profit a year earlier and achieved net sales of ‘Green Hell’ in the amount of PLN 28.1 million compared to PLN 21.2 million in the first half of 2021 (increase by 32% y / y). The high level of sales revenues in the reporting period was achieved thanks to very good sales of the game ‘Green Hell’ on all hardware platforms, and the company maintains the plan to release ‘Building Update’ to ‘Green Hell’ this year, which, combined with good results, should translate into for its further stable development.
Creepy Jar Quotation Source: TradingView In the same period as CD Projekt, the company managed to gain over 45%, and in the following days it may try to break out of the consolidation lasting from the end of August. Ten Square Games, one of the largest producers and publishers of mobile and browser games in Poland, is actively talking about acquisitions, but does not expect any major deals this year. Thus, after the mixed results for the first half of 2022, the company continues its consolidation, and major changes in its quotations should be expected only in 2023.
Ten Square Games Quotes Source: TradingView It is worth mentioning that Ten Square Games have managed to contain a galloping sale, and that may signal a shift in the current sentiment.
On the other hand BoomBit actions make another bounce attemptafter the company announced earlier this month that it has concluded an agreement with ironSource Mobile Ltd for advertising mediation services for current mobile games.
Boom Bit quotes Source: TradingView The agreement applies to titles whose publishers are publishers of the company and entities controlled directly or indirectly by BoomBit, as well as future games released during the term of the agreement on iOS and Android platforms by the above-mentioned. entities.
In turn, PlayWay rebounded from the April lows by over 23% and is measured with the downward trend line. Although the Group expects in the fourth quarter of this year. subsequent premieres, so it has decided to postpone the most important titles until next year, which may significantly reduce the volatility of quotations.
PlayWay quotes Source: TradingView Although the situation of the gaming industry remains ambiguous, it can be assumed that the sector managed to stop the galloping sale, and the behavior of key companies suggests investors’ aspirations for the impending rebound.
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