Concerns are mounting as Ubisoft’s stock prices take another 7% dip, signaling apprehension among shareholders about the company’s future performance. Several recent Ubisoft releases have encountered a rocky reception in the market, amplifying worries about the company’s trajectory. The latest addition to Ubisoft’s lineup, Star Wars Outlaws, while receiving favorable reviews from critics on platforms like Metacritic, failed to resonate with the Star Wars fan base. This lukewarm reception saw Ubisoft shares hit a 10-year low, with a subsequent 7% drop exacerbating concerns about the company’s outlook.
The decline in stock prices was triggered by pressure from a significant minority shareholder urging Ubisoft to either go private or leverage French minority laws to gather enough shareholders for a proxy fight and potential sale. The investor’s demands extend beyond privatization, also calling for a leadership overhaul to usher in a new CEO focused on optimizing costs and studio structures for enhanced competitiveness and agility.
Despite successful releases like Prince of Persia: The Lost Crown in recent years, Ubisoft’s overall reputation has been tainted by the underwhelming player feedback garnered by titles such as XDefiant and Star Wars Outlaws. With XDefiant now facing the risk of waning post-launch support due to dwindling player numbers, a key contributor to Ubisoft’s financial success is at stake.
If player engagement fails to pick up by the time XDefiant reaches its third season, the game could lose vital post-launch support crucial for retaining its player base. At present, Ubisoft Entertainment SA shares stand at 13.67 euros, approximately $15.09, with a single-day decrease of 7.13%, hitting a low of 13.31 euros ($14.69).
In an open letter, shareholders from AJ Investments assert that Ubisoft is undervalued, positing that the stock should ideally be valued between 40-45 euros per share. Proposals from AJ Investments advocate for a potential partnership with Tencent to drive company growth, along with stringent cost-cutting measures to align staff levels with industry benchmarks.
Should Ubisoft heed these recommendations and enact operational changes, the industry may witness a wave of layoffs aimed at appeasing shareholders’ interests.
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