Netmarble revealed that it plans to release nine new games this year and aims for a resurgence, but its stock price has been on a decline since last month. This is due to forecasts predicting a drop in fourth-quarter revenue and increasing uncertainty regarding the success of new games. The industry believes that if Netmarble does not have a game on the level of "Solo Leveling" this year, a profit decrease is inevitable.
According to the Korea Exchange on the 24th, Netmarble's stock closed at 43,550 won that day. Just a month ago, the stock price was 53,000 won, but it dropped by about 17.8% in a month. Netmarble's stock surged to as high as 58,600 won on the 13th of last month but has now plummeted to the low 40,000s.
The decline in Netmarble's stock price is anticipated due to predictions that its performance growth will be stifled in the fourth quarter, following the third quarter of last year. According to financial information provider FnGuide, Netmarble's fourth-quarter revenue is expected to be 629.6 billion won, with an operating profit of 29.3 billion won. While this figure aligns with the recently lowered consensus, the operating profit is projected to decrease by 55.2% compared to the previous quarter, indicating poor performance.
The poor performance in the fourth quarter is attributed to the failure of the game "King Arthur: Legend Rises" and the revenue decrease of "Solo Leveling: Arise" (hereafter referred to as Solo Leveling). Solo Leveling, released in the second quarter of last year, served as Netmarble's main cash cow and was expected to signal a turnaround in performance. In the second quarter of last year, Netmarble recorded its highest quarterly revenue of 782.1 billion won, with an operating profit of 111.2 billion won, marking a return to profit compared to the same period last year. However, the strength of Solo Leveling did not last long. In fact, the revenue and operating profit for the third quarter of last year were 647.3 billion won and 65.5 billion won, respectively, representing decreases of 17.2% and 41.1% compared to the previous quarter.
The uncertainty surrounding the success of newly announced games this year is dampening investor sentiment. Netmarble has stated that it plans to showcase a total of nine new games this year, with four set for the first half and five for the second half. Specifically, these include ▲ RF Online Next ▲ Game of Thrones: King's Road ▲ KOF: Growing Up ▲ Seven Knights: Reverse ▲ The Seven Deadly Sins: Origin ▲ Mongil: Stardive ▲ The Red: Blood Heir ▲ Damas Ribbon ▲ Solo Leveling: Arise (Steam) among others.
However, despite the diverse lineup, the risk of success for new games has increased compared to the past. In fact, since 2023, major game companies have released over 50 new titles, but most have failed to succeed. Aside from a few games like Netmarble's Solo Leveling, SHIFT UP's "Stellar Blade," Nexon's "The First Descendant," and NEOWIZ's "P's Lie," most have not performed well. Jeong Ho-yoon, a researcher at Korea Investment & Securities, noted, "This year, domestic game companies are pursuing diversification in genre, market, and platforms, which brings the risk of releasing works with low understanding and completion in new genres and markets."
Furthermore, the start of former President Trump's second term is expected to act as a hindrance to the stock prices of the gaming industry, including Netmarble. While tariffs are not expected to be affected, if there are measures taken against China, it could impact domestic gaming companies collaborating with Chinese corporations, according to industry reports.
The researcher stated, "The revenue of Solo Leveling, which led the performance improvement last year, is declining, and as it is difficult to rebound on its own, the performance needs the success of new games to increase again," and added, "Among about 10 games scheduled for release, the most anticipated title is the 'Game of Thrones' set to launch in the second quarter." He continued, "Considering the uncertainty of the mobile game market, it is advisable to take a cautious approach until the performance is confirmed."