CD Projekt - return of The King?

The absence of bad news is good news. That's briefly how today's northward rally in CD Projekt's shares can be summed up after the publication of its Q2 2022 results, which are 11% above market expectations on the EBITDA level and 18.8% on the net profit level. Despite this, the price is scouring the bottom set by the August 2017 listing at best. What needs to happen for there to be a permanent change in sentiment on CD Project shares?

Santa's sled in 2022 will be pulled by White Wolf

This year, we have little to look forward to in terms of major events in CD Projekt's product pipeline. Fans of White Wolf's adventures (and investors playing under short, technical purely emotional bumps upward on the company's shares) may rejoice at the news that the fourth quarter of this year will see the debut of "The Witcher 3 Wild Gon Complete Edition," a game that is expected to include additions related to the Netflix series and be upgraded for the new generation of consoles. It seems that we should not expect a significant increase in sales of the game due to the above event, but it could nevertheless represent a potential short-term growth trigger related to hopes of a positive surprise. And a Santa Claus rally, whose sled this time may be pulled not by Rudolph, but by White Wolf. If not fundamentally, then at least PR-wise.

Cyberpunk 2077 with only one add-on

Despite numerous guesses, speculations and predictions, CD Projekt on its official end of IR on Twitter confirmed that Cyberpunk will receive a single paid expansion called Phantom Liberty. A potential growth trigger could be a game for its release scheduled for 2023, but here too it seems that a fundamental breakthrough in results should not be expected. It is worth recalling that for games that are sales hits, about 30% of players choose to purchase add-ons. 

Not patches and add-ons, but Netflix will save Cyberpunk sales?

Given the controversy surrounding the release of Cyberpunk, the relatively low sales and the relatively low player ratings of the next-generation console version (7.0/10 according to Metacritic for PS5 and Xbox Series X), slowly withdrawing from further development of Cybeprunk 2077 in favor of more promising projects seems to be a wise decision. At the same time, the company announced the start of work on two AAA-class projects. Will one of them be Cyberpunk 2? This cannot be ruled out, but for now it remains in the realm of speculation. The Netflix anime series Cyberpunk: EDGERUNNERS will premiere on September 13. Bearing in mind the impact that the release of the series on Netflix with the same title had on sales of The Witcher game, there is a chance that the market will play under a "similar story." However, it should be remembered what a gap there is between player ratings on Metacritic for Cyberpunk and The Witcher 3. The PC versions collected ratings of 7.0 and 9.1 on a 10-point scale, respectively. The sales dynamics of The Witcher 3 and Cyberpunk are also volumes that are completely incomparable. As a result, the potential impact of the EDGERUNNERS series on Cyberpunk's sales also seems to be smaller, but nevertheless the market is currently sensitive to any positive news regarding CD Projekt, so a short technical rebound can be expected. 

(Wild) Hunt or be hunted

In terms of the M&A market, management has announced that, as part of the group's strategy update, it intends to become more active in the M&A market, but it is the rumors (more or less verified) of potential acquisitions in the global gaming market (Tencent - Ubisoft or Amazon - Electronic Arts) that seem to have most heated investors' hopes for the emergence of a foreign Deus ex Machina in our market, which would lead to the dissolution of the stock in this gaming theater that is playing out on the WSE, and which, according to investors impatient with the developments, has been going on for a bit too long. 

All hope in the latest Witcher, which is to be the first part of a whole new saga. There's a chance that its protagonist will no longer be the White Wolf, but a completely new character, which in 2025/2026 may no longer be running on Flipper, but on Unreal Engine 5.

And this bodes quite well. 

CD Projekt (CDR.PL) chart, D1 interval. Shares are moving in strong downtrend, still well below 200 SMA. Potentially higher demand can cause bull attacks 100 USD, psychologically level of key short-term resistance again. Today CD Projekt stock gains 5%. Source: xStation5