Ubisoft Stock Drops as ‘Assassin’s Creed’ Creator Announces Restructuring, Cancels Games
Ubisoft, the renowned French video game developer known for the “Assassin’s Creed” franchise, is undergoing a significant reorganization. This restructuring involves the cancellation of six games and a delay in seven others, leading to a steep decline in its stock price, the lowest in over 14 years.
Ubisoft’s Major Reorganization
On January 22, 2024, Ubisoft announced plans to restructure its operations into five creative divisions, categorized by genre. This shift aims to improve focus and reduce costs after a series of disappointing game releases and weak financial outcomes in recent years.
Impact on Stock and Financials
The announcement triggered a sharp decline in Ubisoft’s shares, which plummeted by as much as 35%. This drop marks the company’s most significant single-day loss since it went public in 1996. As of early Thursday trading, shares were priced around 4.5 euros, resulting in a market capitalization of approximately 616 million euros (around $720 million). This reflects a significant decrease from a peak market valuation of about 11 billion euros in 2018.
- Shares fell up to 35% in value.
- Trading price approximately 4.5 euros post-announcement.
- Market capitalization dropped below 1 billion euros.
- Stock nearly halved in value across the previous year.
Game Cancellations and Delays
Among the game cancellations is a much-anticipated remake of “Prince of Persia.” Seven additional titles have also been delayed, signaling a cautious approach as the company navigates its financial recovery. This decision follows years characterized by the cancellation of projects and unmet release timelines.
Studio Closures and Future Outlook
As part of the restructuring, Ubisoft plans to close its studios located in Halifax, Canada, and Stockholm, with further downscaling expected in other regions. This course of action reflects an overarching strategy to regain investor confidence.
Recently, the company faced significant scrutiny after an accounting oversight revealed a breach of its debt covenant. To address this, they utilized part of Tencent’s significant 1-billion-euro investment to repay outstanding loans, further indicating the pressing nature of Ubisoft’s financial difficulties.
Analysts, including Corentin Marty from TP ICAP Midcap, describe the reorganization as a “big shake-up.” The outlook for positive cash generation seems bleak, particularly with a 675-million-euro bond maturing in November 2027, expected to exert more pressure on Ubisoft’s financial structure.
As Ubisoft embarks on this comprehensive reorganization, the gaming world will be watching closely to see how these changes affect the iconic publisher’s future.
