Frontier Developments Share Discussion Threads

[adamb1978] 13/6/2021 08:56

Yank I've just checked your posts and at least for the last 18 months, they're solely on this board coming up with various allegations against the company. I'm not sure what your angle is (disgruntled former employee, competitor etc) however, given you seem to move from one allegation to another and are not willing to listen to facts, I'm going to put you on filter and would encourage others to do similarly. Whilst advfn often suffers from people only arguing one side of the debate, it also suffers from people having vendettas and trolling. Enjoy the rest of your weekend. Adam

[yankhanson] 12/6/2021 21:55

"a rescue from a cash crisis?!? This gets even weirder." Nothing weird about it. Take a look at the trading statements running up to the game launch. "Companies which are growing often issue equity to accelerate growth" Well obviously, but it didn't happen did it? "Tencent will be a powerful partner for Frontier ... accelerate our growth into the key Chinese market" said FDEV. Yet still there's no sign of any of that partnering or acceleration. Tencent run WeGame, one of the biggest game shops in the world. It took up the game No Man's Sky, probably the biggest competitor to FDEV's Elite Dangerous, Did it take up Elite Dangerous? No. Has it taken up any FDEV game wince the so-called partnership. No. Not much os a partnership, is it? You say if not Tencent "they would have presumably raised the same amount, to accelerate the same growth, from institutions". Except there's no growth visible from that cash. Nothiing to show this cash was genuinely for growth. As I said, as the trading updates and accounts show, it was to avert a cash crisis brought on by high spending and insufficient earnings.

[adamb1978] 12/6/2021 16:51

Yank "a rescue from a cash crisis"?!? This gets even weirder. First you said that the Tencent investment somehow meant that FDEV's growth wasn't all organic, and now they were on the verge of going bust? In 2017 Tencent took a c.9% stake at a price which, to quote the RNS, was "calculated as the last 20 trading days volume weighted average price (VWAP) immediately prior to subscription." Rescues happen at heavily discounted prices, not at in effect the market price. They happen at those discounted prices because the investor holds the whip hand and wants a great deal to save a failing business. Equity raisings which happen at the market price at done at that price because the company is performing well and the company can dictate the price. It was also completed in July 2017 and their balance sheet 2 months before had £12.7m net cash. Companies which are growing often issue equity to accelerate growth, and therefore one thing which is always worth checking in growth companies is how much equity a company has issued to fund that growth. Obviously if a company is issuing piles of equity to generate growth, it might actually be destroying value for shareholders as an individual shareholder gets diluted to a greater extent than the value creation from the growth. However, as I said before, FDEV have increased their share cap by 15% over 5 years, including the Tencent invest, which is a very low amount (so is very good). Your point about whether there have been any strategic benefits from the investment is, however, valid. Its not clear to me that the relationship with Tencent has created any value over and above the cash injected. However, had FDEV not raised equity from Tencent then they would have presumably raised the same amount, to accelerate the same growth, from institutions. Therefore any strategic benefits is really upside, rather than necessary. People taking the other side of an argument is good, and these boards are often full of hype, however this criticism of the Tencent investment really hold little to no water. Adam

[adamb1978] 12/6/2021 13:01

Yank Well, I'm afraid it is true on the two points, as you confirmed yourself: "organic growth" - generally people delineate between organic growth (ie growing the existing business) and inorganic growth (acquisitions). FDEV hasn't acquired other businesses which have contributed meaningfully to the top-line. On the Tencent investment, as you say yourself this was Tencent taking a stake in FDEV in the same way that they have done in a lot of growing companies, rather than something which has boosted turnover. So all the turnover growth by FDEV has come from organic growth (ie the harder way to grow, rather than acquiring turnover) "financed by issuing equity" - as you quoted, I said 'pretty much'. Their share count has increased from 33.6m at the start of FY16 to 38.8m now, so about a 15% increase over that period. With a lot of small companies or growing companies, you see that they do achieve growth but financed by issuing piles of equity. Here, FDEV share count has increased by about 3% p.a. 'Equity for cash' as you say - that's what all issuances of new shares is. On Tencent generally, they have a lot of positions in companies like FDEV and from a quick google, here is another position which they took in Feb: h t t p s ://w w w.gamesindustry.biz/articles/2021-02-09-tencent-acquires-minority-stake-in-bohemia-interactive The Chinese mega-caps have lots of positions like this. Adam

[yankhanson] 12/6/2021 12:48

AdamB1978 "That's pretty much all been organic growth too, and not even financed by issuing equity" Not true. FDev sold 9% of the company to Chinese megacorp Tencent, losing CEO Braben his voting majority, as a pretty desperate avoidance of the cash crisis prior to development of its first Jurassic game. Yes FDEV spun it as a "strategic investment" and "partnership" but the time since has showed no trace of any partnering. Tencent hasn't taken a single FDEV game onto its huge web store. It is pretty obvious that despite this spin this move was no more than it appeared. Equity for cash.

[p1nkfish] 12/6/2021 09:57

This has become a traders stock for a while which is a shame. From 2GBP it had all the characteristics of a solid buy & ride. I can't see this settling well for some time, great for traders.

[adamb1978] 12/6/2021 09:35

Thanks Bamboo. Appreciate the insight - charting isn't something I understand well. I invest on fundamentals

[fledgling1nvestor] 12/6/2021 09:16

E3 is not over yet, there are further announcements from both Frontier and Frontier Foundry in the PC Gaming Show tomorrow. It's worth noting that the Haemimont game is 2 years into a 2-3 year development at this stage (partnership announced 11 June 2019) so it's highly likely to be the third Frontier Foundry game set to release in FY22. I expect we may see something from that tomorrow.

[bamboo2] 12/6/2021 09:08

Adam, Sogo, In terms of support levels, despite all the gloom, it is important to emphasize that while yesterday the share price did test historical support and the neckline, the test was successful. Coupled with that, we have the knowledge that price support levels are the number one obstacle that stops chart patterns reaching their target price, hence the importance of confirmation. Will keep monitoring, particularly for possible turn dates. Gla

[adamb1978] 12/6/2021 08:32

Hi Dave Agreed about the bounce of £21 and back up to the £23 level. On the growth point, yes, they've slightly reduced expectations but still 75%-100% over the next 2 years is excellent. In terms of your point about how this compares to prior years, the comparison is difficult because of the historic lumpiness which is now being ironed out by more titles (also also because growing from small numbers is inevitably quicker). For example, you could say that it grew about 100% over 3 years from FY17 to Fy20, or you could say 170% over FY18 to FY21, or just 5% from FY19 to FY21. Pick a different reference point and one can paint a different picture. Either way, the long-term record of them growing the company is superb and having done so organically too, and generally with organically generated funds rather than by issuing piles of equity. In terms of personal response to the price dip, I bought a few more at £23 would would buy more sub £20, though I dont expect it to get there. That not necessarily a response to the predicting short term movements, just to take advantage of the volatility to add a long-term position. FDEV isnt a big holding of mine - I originally bought at 300p a few years ago but sold far too many on the way up Adam

[sogoesit] 12/6/2021 05:03

Thanks, bamboo, for your TA input. Short term risk is to the downside imv but I will accumulate again between 1800 and 2000 if market gives this. (On fundamentals long term growth still there but the growth rate is compromised, as the TU states, of course). Cheers!

[davecutting] 12/6/2021 01:11

Adam. The fundamentals are still strong but forecast growth is a less than previous years which will have fed the last bear squeeze. CROCI and EBIT are up over previous years. I see that the price tested the 21 low that I mentioned today but bounced back above support, which is encouraging. Next week will tell whether we see a price bounce above 23 or further retracement. If it moves and stays below 21 I'll be out of my position until news reverses the trend

[adamb1978] 11/6/2021 21:47

thanks Bamboo. I was eyeballing it rather than using your precision. IMO the fundamental are strong, and clear growth communicated this morning, so hopefully the support will hold

[bamboo2] 11/6/2021 19:43

Adam, I have my lower horizontal support line at 2280 The large H&S neckline is also support. It is a slightly falling line currently at 2275. The next turn I have indicated is 16/6/2021.

[adamb1978] 11/6/2021 19:06

Hi Bamboo Am not a chartist but do you see support around 2300p? i.e where the price bounced off in late November and then again in early March, and then again where it closed today? Thanks Adam

[bamboo2] 11/6/2021 18:54

Sogo, It avoided confirming the bigger H&S [tp 1630, possibly looking to test gap at 1535-1570 dated 1/5/2020] for now. There is a smaller H&S [within the RH shoulder of the larger pattern] confirmed today, tp is approx 1970, support nearby at 2030-2050

[adamb1978] 11/6/2021 16:54

If an incompetent company can increase turnover 10x in 7 years, and then be talking about a further 75%-100% over the next 2 years then I want to invest in many more incompetent companies!! edit:...and do so without M&A and without issuing piles of shares!! Bring on more incompetence like that please!!

[bat5hit] 11/6/2021 15:57

You've already said this, multiple times.

[shanklin] 11/6/2021 15:24

I am just amazed that FDEV are sufficiently uncaring or incompetent to have released such a deficient game. Far better reputation wise to have delayed the release, stated that they rate quality above short term issues and wanted to release a quality game even if it was delayed. Even worse if they tested it and didn’t find the problems. What must GAW and F1 be thinking?

[p1nkfish] 11/6/2021 15:16

TA is poor, needs some time to repair.

[bulltradept] 11/6/2021 15:14

Ah! I see the ole analysts know more than Mr Market line being trotted out! A bit like the one about economists have correctly predicted two out of the last five recessions. :-)

[scooper72] 11/6/2021 15:04

Personally I see this as a chance to buy more of a company that will be around for a long time and while there are I am sure lots of smaller unlisted similar companies in the same industry there are few and far between with a history like Frontier, so quite happy to see my average profit fall to just over 160 percent and a chance to build my stake. Also hold Team 17, Sumo and KWS.

[shanklin] 11/6/2021 14:57

As previously mentioned, I think there are two aspects to the reputational issue: - the discouragement of IP owners who won’t want their game mucked up by FDEV - the discouragement of players of FDEV games; presumably JWE2 will provide much that should have been in the original JWE. Would potentially be interested on further disaster but it seems too dear currently IMHO

[bat5hit] 11/6/2021 14:42

Let's provide some context here shall we. CD Projekt Red are behind The Witcher - a series which some argue to be the best games ever made. They are (were) masters at story telling. Added to this, Cyberpunk was hyped since 2013. They had Keanu Reeves as one of the main characters in the game for heaven's sake. The marketing of that game was so phenomenal, the game was almost destined to disappoint. CD Projekt Red sold roughly 13.7million copies of Cyberpunk. I reckon ED has sold about 5.5 million (cumulatively).I like Frontier but, come on, comparing them to CD Projekt Red is like comparing Michael Schumacher to Daniel Ricciardo.