New Strategy Didnt's Save CD Projekt From Losing Stock Value
March 31 turned out to be fatal for CD Projekt's shares. The company's new strategy and update 1.2 for Cyberpunk 2077 disappointed the investors.
- The value of CD Project's shares dropped significantly after the company published the strategy update;
- Analysts speak of the developer's plans being too vague and imprecise;
- Some also point to the mixed reception of the 1.2 update for Cyberpunk 2077, despite praise from some buyers.
After a long wait, Cyberpunk 2077 finally got its first really big patch. Not much later, we learned of CD Projekt's plans as part of the company's strategy update. In short, things were finally starting to look up for the developer after several difficult months. At least, that's what you might have thought until reports from the Warsaw Stock Exchange surfaced. In the afternoon, CD Projekt's shares plummeted 14%, and for the first time in over two years they were priced below USD 48.09. At the time of writing this news, the company has rebounded slightly, reaching a valuation of USD 48.23 per share with a loss of 12.55%.
There are two main reasons why CD Projekt is not doing well on the stock market today. The report of analyst Matthew Walker of the Swiss bank Credit Suisse, who, after the publication of the company's updated strategy, lowered the target price of its shares from USD 101.25 to... 39.24 (-61%), certainly did its part. The decision was justified by the drastic adjustment of the expected sales of Cyberpunk 2077 in 2021 (from 16 million to 8.6 million copies; via StreetInsider.com).
However, for both Walker and other analysts, the main problem turned out to be the strategy itself. Yes, CD Projekt mentioned some promising initiatives related to Cyberpunk 2077 and The Witcher, as well as starting work on new projects next year. However, experts found CD Projekt's strategy to be too cautious, vague, and not referring to the company's long-term plans. There was no mention of the company's actions aimed at regaining customer trust after the disappointing launch of Cyberpunk 2077. This opinion was expressed by Kacper Kopron, among others, in a comment by brokerage Trigon, as well as by several other local experts:
"We assess the strategy negatively. First of all, the strategy is not precise in time and does not refer to plans of future games for the following years. It is, in our opinion, very vague and shows only short-term product perspective, which should come as a disappointment to the market: no paid expansion for Cyberpunk 2077 this year, no announcement of Cyberpunk Online [i.e. Cyberpunk 2077's multiplayer mode - author's note] as a separate game and no reference to the number of projects in the long term in relation to the assumptions of the incentive program."
Investors were also disappointed by the lack of greater enthusiasm on the part of players after the debut of patch version 1.2. which has undoubtedly improved a lot and receives praise from many Internet users. However, we can also find reports of new problems after installing the update. No one denies that CD Projekt RED still has a lot to do in Cyberpunk 2077, which in the context of the long wait for the patch may indeed not fill with enthusiasm. The lack of enthusiasm can also be seen in the ever-decreasing feedback received from Steam users over the past 30 days, with less than 60% of them giving the game a positive rating.
