Video game maker CD Projekt rises after strategy update, share buyback


FILE PHOTO: Boxes with CD Projekt's game Cyberpunk 2077 are displayed in Warsaw, Poland, Dec. 14, 2020. REUTERS/Kacper Pempel

(Reuters) -Shares in CD Projekt rose on Wednesday as investors digested the Polish video game maker's line-up of new games that analysts said could boost growth, but also increase risks.

The stock jumped 9% at the open after the company on Tuesday announced long-term plans for new games in its two core franchises, the Witcher and Cyberpunk, and a new original game.

It also launched a share buyback for up to 100 million zlotys ($21 million).

"We see the goals announced by the company as ambitious and their implementation will allow it to reach a new, much higher level," BDM brokerage analysts wrote.

They flagged risks related to shifting from CD Projekt's previous practice of focusing on one big-ticket game to developing several projects simultaneously.

WAITING GAME

CD Projekt released the first game in the Witcher medieval fantasy franchise in 2007 and added another with "Cyberpunk 2077" in late 2020.

Its production cycle has usually taken four-to-five years.

"The announcement of the Witcher saga or a new IP gives hope for a more expansive development in the future than previously expected," Piotr Cieslak, managing director at Poland's Retail Investors' Association told Reuters in an email.

He noted that multiple, simultaneous projects would likely come with higher costs and shareholders would need to wait to see the impact.

CD Projekt wants to increase the pace of hiring, the company's chief financial officer Piotr Nielubowicz told reporters on Wednesday.

The company has been hiring about 100 people a year in recent years.

Credit Suisse analysts noted that adding about 400 staff, as CD Projekt forms a new studio in North America, could increase development costs by 50% as it pays higher U.S. salaries.

"This could lead to some sizeable near-term profit reductions, in our view. The first positive impact on revenue might not be until 2026," they wrote.

The stock, which has lost around 40% of its value so far this year, trimmed earlier gains and was up around 6% as of 1349 GMT.

($1 = 4.8288 zlotys)

(Reporting by Anna Pruchnicka, additional reporting by Karol Badohal and Adrianna Ebert, Editing by Barbara Lewis and Mark Potter)

Article type: free
User access status:
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

   

Next In Tech News

U.S. lawmakers say some fintechs failed to prevent 'obvious' pandemic fraud
U.S. CFTC chairman says met with former FTX chief 10 times over clearing application
Exclusive-Meta sought to settle EU antitrust investigations, sources say
U.S. Justice Department weighs new guidance on messaging apps, clawback policies -official
Salesforce shares tumble after surprise exit of co-CEO Taylor
FTX ex-CEO Bankman-Fried says he did not know of improper use of customer funds -ABC News
India's digital rupee fails to excite interest, bankers say
Netflix to let more subscribers preview content - WSJ
US Amazon facility shows off robots built for faster deliveries
Google says hacking tools are likely tied to Spanish firm

Others Also Read