Ubisoft Shares Drop Over 16% Following Guidance Cut

Shares in Ubisoft Entertainment plummeted by over 16% during mid-morning trading on Thursday after the French video game company significantly revised its financial outlook.

In a statement released late Wednesday, Ubisoft stated that it now anticipates net bookings of approximately €1.95 billion for the 2024-2025 fiscal year, a decline from previous estimates. The company also forecasted second-quarter net bookings to be between €350 million and €370 million, sharply lower than the earlier projection of €500 million.

The reduction in financial targets is primarily due to the decision to delay the much-anticipated release of the latest installment in the “Assassin’s Creed” series and a weaker-than-expected launch of “Star Wars Outlaws.”

The family-owned company had been relying on these titles to reverse a trend of underperformance, which has resulted in four consecutive years of negative cash flows. Ubisoft has postponed “Assassin’s Creed Shadows” from its initial release date of November 12 to February 14, while the reception for “Star Wars Outlaws” has been lukewarm among gamers.

“Our second quarter performance fell short of our expectations, prompting us to address this swiftly and firmly,” said CEO Yves Guillemot. He acknowledged the need for improved efficiency while keeping player satisfaction in focus.

Guillemot also announced that an internal review would begin to enhance the company’s execution, particularly in its player-centric approach, and to accelerate its strategic shift toward a more effective business model for the benefit of stakeholders and shareholders.

Analysts at BMO Capital Markets noted that the update offers clarity on Ubisoft’s plans and helps to mitigate risks regarding the stock’s long-term prospects. They maintained an “Outperform” rating for the company but reduced their price target from €22 to €20.