Ubisoft: Share price in free fall – investors sound the alarm

With XDefiant and Star Wars Outlaws, Ubisoft actually has two hot irons in the fire, but apparently things aren't going well, because the share prices continue to drop.

Things haven't been going well at Ubisoft for some time. Many projects have been stopped or revamped, others like Skull & Bones have eaten up so much time and budget that they are beyond profitability. And some titles aren't doing as well as hoped. XDefiant, for example, started off strong, but player numbers have continued to drop, and Star Wars Outlaws has also apparently made significantly less money than hoped, despite presumably huge development and licensing costs.

This is not good for the share price, as it has fallen again and is slowly but surely moving towards its lowest value in the last 10 years at 13.67 euros. Ubisoft's share price has already fallen by more than 50 percent in the last 12 months and investors and shareholders are slowly starting to panic.

AJ Investments, a minority shareholder from Slovakia, has now made legal, strategic and structural changes to Ubisoft's leadership in an open letter. It calls on the board to consider privatizing the company or even taking it over by a strategic partner, “implement a comprehensive cost-cutting program and optimize the workforce to be comparable with industry leaders,” increase the focus on core IPs and consider replacing current CEO Yves Guillemot.

According to AJ Investments, Ubisoft's share price should actually be between 40 and 45 euros due to its strong brands, and not a measly 13.67 euros. The accusations are clear: “The main reason why the valuation is so low compared to other companies is that Ubisoft is currently poorly managed and shareholders are hostages of the Guillemot family and Tencent, who are exploiting them. Management is focused on satisfying investors with good quarterly results, rather than on a long-term strategy to offer players an exceptional experience.”

The current strategy of releasing several mediocre games per year instead of focusing on real hits from the big brands is incomprehensible. “Franchises like Rayman, Splinter Cell, For Honor and Watch Dogs have been dormant for years, even though these games are loved by millions of players around the world. Star Wars Outlaws is expected to bring good numbers, but the latest reviews show that the game was not 100% ready, even though the whole world was waiting for an open-world Star Wars game.
Franchise was waiting.”

There are serious accusations and it is obvious that Ubisoft is in crisis. Now it remains to be seen whether other investors will join the call to put more pressure on the management and whether this will actually have an impact in the foreseeable future.