Netmarble Has Started Making Money, But Why Can't Its Stock Price Rise? [Weekend Money]

A String of New Release Flops in the First Half

Second-Quarter Operating Profit Down 21% Year-on-Year

Market Expectations for Game Companies Drop

"Major IP Releases and Multiplatform Strategies Must Deliver Results"

Netmarble has returned to profitability. The effects of cost optimization are also becoming apparent. However, the stock price continues to struggle. The reason is simple: expectations for new releases, the biggest driver of game company stock prices, have weakened.

On August 9, Shinhan Investment & Securities cut Netmarble's target price by 37.6% to 58,000 won for this reason. The "Buy" investment rating was maintained. On the surface, the buy suggestion remains, but expectations have dropped substantially.

Looking only at the second quarter results, the performance was not bad. Netmarble's second quarter revenue reached 749.2 billion won, up 4.4% year-on-year and 15.0% quarter-on-quarter. Operating profit was 80.1 billion won, up 50.8% from the previous quarter but down 20.8% from a year earlier. This figure also fell far short of the market consensus of 86.1 billion won.

The problem lay in the performance of major new releases. "MonGil: Star Dive," which launched in April, fell far short of market expectations. Meanwhile, "The Seven Deadly Sins: Origin," despite emphasizing multiplatform support and content continuity, is experiencing a rapid decline in sales.

Of course, "SOL: Enchant," launched in June, ranked first in domestic sales and posted an average daily revenue of 1.7 billion won over the first 13 days after launch. However, what investors were hoping for was not the stand-out performance of one or two medium-sized titles, but the clear box office success of a major IP.

There are still new titles scheduled for the second half of the year. Netmarble plans to launch three titles: "Solo Leveling: Karma," "Shangri-La Frontier," and "Project Aegis." Shinhan Investment & Securities expects "Shangri-La Frontier" to generate the most revenue among them, forecasting an average daily revenue of about 800 million won.

However, expectations are not what they used to be. This is because the releases of "Evilvein" and "Project Octopus" are believed to be delayed, and recent weak performance from major releases has reduced market confidence in the hit rate for new titles. Compared to the past, when "Ni no Kuni: Cross Worlds" achieved daily revenue in the 2 billion won range immediately after launch, expectations have been lowered.

Ultimately, the key for Netmarble’s stock price is not profitability but the restoration of trust. While game companies are regaining profitability by reducing costs, valuations tend to move lower if growth rates fall. Shinhan Investment & Securities applied a target price-to-earnings ratio (PER) of 10 times for this reason.

Sukkyoon Kang, Senior Researcher at Shinhan Investment & Securities, explained, "Disappointing new releases in the first half, delays in planned launches, and a decreasing hit rate are collectively causing the average PER for game companies to decline." He added, "With trust in new releases like 'The Seven Deadly Sins' and 'MonGil' at a low point, Netmarble must prove that future multiplatform strategies and major IP releases can deliver real results in order for a revaluation of corporate value to be possible."

This content was produced with the assistance of AI translation services.