Ubisoft share price is sitting below a 10-year low at around €13.67 at the time of writing, dipping below the €15 mark it was earlier this month. This free fall in the company’s stock price has become a source of worry to investors who believe the actual valuation of Ubisoft’s shares should be between €40 and €45.
According to analysts, Ubisoft shares have lost over 40% of their value in the last 12 months (and far more if you look six years backward). At the close of trading on Monday, the Assassin’s Creed publisher’s share price had fallen by 7.13%. The plunge has been linked to declining interest in free-to-play shooter XDefiant and the poor commercial performance of the company’s recent releases.
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Angered by the declining performance of Ubisoft shares, hedge fund AJ Investment which holds less than 1% stake in Ubisoft penned an open letter to the company calling for strategic and structural changes to reverse the decline.
The Slovakia-based AJ Investments made three recommendations that they said would turn around the fortune for investors, after relaying their fears for the future of the company under the current management headed by Yves Guillemot. The recommendations made by the hedge fund include:
- Allow TAKE PRIVATE PROCESS by PE firms or Guillemot family + Tencent at fair price
- Allow SALE PROCESS as we are in discussion with investors to fight against Guillemot family with so called proxy fight at extraordinary shareholder meeting
- Change of the current management. Start hiring process of NEW CEO who will optimise the cost and studio structure for more agile and competitive company as Ubisoft should be
“The main reason why the valuation is so low compared to the peers is that Ubisoft at current state is mismanaged and shareholders are hostages of Guillemot family members and Tencent who take advantage of them,” the hedge fund said.
“Management is focused on pleasing investors with beating quarterly results and not focusing on long-term strategy to provide exceptional experience for the gamers. We cannot understand the decision-making process of current management that is focused on releasing multiple average games per year that are harming Ubisoft’s reputation among gamers community instead of focusing to provide hit games within its exceptional franchise portfolio.
“Division Heartland which was very much expected game from the gamers was cancelled. Skull and Bones release was not a success, Prince of Persia Lost Crown was okay but not very impressive as nobody talks about the game anymore. Rainbow Siege is doing great, nevertheless franchises such Rayman, Splinter Cell, For Honor, Watch Dogs are sleeping for years despite these games are loved by millions of players all around the world.”
Ubisoft’s latest release, Star Wars Outlaws, was the first open-world Star Wars game. Although the anticipation for the game was high before its release, the recent reviews show that many players were dissatisfied. The game’s best average rating on Metacritic was 76 on PS5 and PC and 75 on Xbox Series X.
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“If we compare Ubisoft’s valuation with its peers such as Electronic Arts, Take-Two Interactive, Roblox, Embracer, or Playtika. Ubisoft is significantly undervalued based on EV/Sales, EV/ EBITDA as well as Book Value per share. This is attractive entry-point for investors, but Guillemot’s and Tencent are blocking any potential move.”
Ubisoft is desperately trying to get players back on XDefiant
With the number of XDefiant players steadily on a decline, Ubisoft has devised a way to get players back. The company is giving out virtual currencies as daily log-in bonuses. Players can claim up to 900 XCoins if they consistently log into the game from September 9 to September 24.
The virtual currency can be used for purchasing in-game items including battle passes and cosmetics. A bundle of 1,000 XCoins costs $9.99/ £7.99. Also included in the daily log-in bonus are Weapon XP and battle pass XP boosters.
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It’s time to celebrate Season 1!
🎁Starts on 9/9 at 10 AM PT
🎉Resets daily at 10 AM PT
🎊 Ends on 9/25 at 6 AM PTJust log-in each day and the reward will be added to your account. Thank you all for joining us this season! pic.twitter.com/Fz44Wlskua
— XDefiant (@PlayXDefiant) September 6, 2024
Ubisoft advertised the bonus as a way of celebrating the end of Season 1. However, the initiative coming at a time when shareholders are complaining about a decline in the company’s share price is not a coincidence.
In a social media post, XDefiant executive producer Mark Rubin said, “We are super excited about the roadmap of upcoming content and features and we’ve added a bunch more great talented people to the XDefiant team for just that reason!”
