Frontier Developments Share Discussion Threads

[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.

[adamb1978] 11/6/2021 14:34

Agree with the above comments about reputational damage - can never be helpful - however for me the numbers speak for themselves.

Turnover has increased almost 10x from FY14 to Fy21 or if you want to shorten the time period to start from when turnover was a little higher, about 4.5x from FY16 to FY21. That's pretty much all been organic growth too, and not even financed by issuing equity - share count is up just 15% from Fy16 to FY21

Based on their guidance, turnover will further increase by 75%-100% over the next two years too!

Companies go through periods where they have blips, and this is somewhat similar to BOO, though obviously a very different sector and different blips, but both are strong growing and generate great returns.

[gswredland] 11/6/2021 14:26

Thanks Rivaldo

[rivaldo] 11/6/2021 14:19

Not a holder any more, but thought you might be interested in this analyst commentary - AJ Bell not too keen and talking about "reputational damage":

"Frontier Developments PLC was downgraded to Hold from Buy at Shore Capital on Friday, after guidance missed expectations and the new Elite Dangerous: Odyssey game was poorly received.

Shares in Frontier were down 12% to 2,325.95 pence in London. They've dropped 24% in the year-to-date.

The Cambridge-based video game developer said on Friday that revenue for the year ended May 31 would be GBP91 million, below Shore's expectation of GBP94.6 million.

For the 2022 financial year, Frontier forecast revenue between GBP130 million and GBP150 million, missing Shore's expectation of GBP152 million as the next F1 Manager game is set to be delayed to financial 2023.

Analysts Katie Cousins and Roddy Davidson urged caution over the stock.

"We believe FDEV can capture gamers attention within a dynamic market, creating long-lasting value. However given some development challenges remain, along with a disappointing title launch and further delays, we express some caution," they said.

Shareholders can buy into the video games industry with lower risk, the analysts said, suggesting Keywords Studios PLC as an alternative stock with a lower price-to-earnings ratio. They kept their price target for Frontier at 2,630 pence.

AJ Bell Investment Director Russ Mould believes Elite Dangerous: Odyssey could cause more lasting damage.

"The reviews have been brutal to say the least. Users say it is another Cyberpunk disaster with poor user interface, significant bugs and the game constantly crashing. Frontier has already pushed through two rounds of updates, but significant reputational damage might have already been done," he said.

Cyberpunk 2077 developer CD Projekt SA ended up refunding customers after the game was critically panned last year.

Liberum was more positive about Frontier, saying the GBP91 million revenue in financial 2021 beat its expectations of GBP90 million.

The delay to F1 Manager should "ensure that the game exceeds players' expectations," analysts Olivia Honychurch and Janardan Menon said. Meanwhile, the newly announced Jurassic World Evolution 2, due to be released this calendar year, will almost make up for the F1 Manager shortfall."

[sogoesit] 11/6/2021 14:05

Volatility, and context:
The last major sell-off (wave down) started beginning June 2018.
It fell 60% approx. before changing trend.

The current sell off is approx. 33% from the beginning January high.
On my charts (weekly close) next support is 1775 approx for 46% down.
Then 1450 for a 56% fall.

(I am long with an average entry of 1650 approx.).

[mark4231] 11/6/2021 13:53

I bought back into FDEV a couple of days ago, and have bought another chunk late this morning. Intend to hold tight for the long term. They have a fantastic pipeline of games coming up.

[adamb1978] 11/6/2021 13:35

Zip

I think its good value though if compare to other games developers, even before you adjust for growth

the price is volatile - if you look at it since July 1st last year, its gone from £17 to £35 then to about £23 then back up to around £32 now back to £23

Sure there have been variations around expectations, but nothing of that magnitude and the trend in company performance is still upwards.

Adam

[zipstuck] 11/6/2021 13:27

ALNC - Downgrades as outlook disappoints. Clearly higher expectations were supporting the price to state the bleeding obvious

[adamb1978] 11/6/2021 12:52

Hi Dave - I've bought a few more. FDEV is trading at a discount to the sector in my view yet growing far faster. Who knows whether it will go up or down in the short-term from here, but I think the odds are heavily in favour of it being materially higher in a cople years time

[davecutting] 11/6/2021 12:29

As I said in post #6243, the share price will test support at 23. It's there now. It's good entry point with a stop loss at 21.25 for a potential reward of 38% to the upside by September

[bat5hit] 11/6/2021 11:02

I feel as though your assessment is excluding the proven track record they have. Yes EDO has had difficulties, but there are a whole host of titles they've released that didn't. I purchased Square Enix's "Outriders" at launch, it had all the same issues as EDO, so I've left it a while, to allow devs time to fix it, and will play again over the coming months. Do you know why I didn't demand a refund and throw a hissy fit? Because the game is fun. It'll still be fun when I play it later.By all means, it's good to be critical, but don't blow things out of all proportion.

[nimbo1] 11/6/2021 10:24

it was a screw up for sure...they released it as needed the money to reach anywhere close to forecasts but they should have kept the game in development at least another 6-12 months from a consumer perspective...rock and hard place I guess.

I doubt it has any lasting impact though - a follow on from an in-house developed title won't damage the credibility from planet coaster, planet zoo and jwe1 / 2.

I think it does raise the risk for fdev developing things outside of their core area of expertise though - no guarantee of success.

[shanklin] 11/6/2021 09:56

Should think IP owners will be very seriously questioning FDEV’s ability to add to their brand value after the debacle of the latest release. Surely, at the very minimum, IP owners will expect a much bigger share of the pie to take the risk of working with FDEV.

[adamb1978] 11/6/2021 08:34

Hi Nimbo

Yes, the volatility in this, like a lot of high growth small/mid caps will provide opportunities. I tend to use limit orders which I set for 30-60 days and then see whether they bite

I've just been through my numbers and think I'm looking for the share price to get to £35 in 24 months largely based on their guidance (which they tend to upgrade over time!), so I would personally look for something around £22/£23 if I do top-up more, though depends on what sort of upside you look for. Personally I look for 75% upside over 2-3 years in a small cap and about 50% in a similar time frame for a mid-cap. Therefore I dont think there's much downside in the price from here, and if they upgrade their figures as they tend to, there's more growth over that £35.

Where could this get to longer term? Lets say they grow turnover at 25%-30% for the next 5 years, and get turnover to £300m. EPS might be say 180p and for a company generating consistent growth and decent returns on capital, a PE of up to 40x could be possible, therefore a £70 share price in 5 years. I dont see the company selling up before then as I dont think thats what the management want to do, but I guess you never know what offers might arrive.

Adam

[w1lbur01] 11/6/2021 08:32

Dipped my toe in looks a reasonable first entry point

[sogoesit] 11/6/2021 08:27

My takeaway:
On the one hand we are a beneficiary of lockdowns (in games’ take-up) but
On the other hand we are a loser (from production delay and faulty releases).
What’s the net opportunity gain/loss? The market should tell us.

[nimbo1] 11/6/2021 08:15

JWE 2 should be good - hopefully what they would have made first time round without timing constraints. Planet Zoo is excellent so this is back in the FDEV area of expertise. Remains to be seen whether the release is as high profile without a film alongside to cause excitement... but bound to be a decent financial performer whatever.

Also the share price trend seems down in the short term but I cant be the only one watching for a re-entry point! The price has been subject to massive swings in sentiment before - the journey from £18 to £7 a couple of years ago is testament to that and it happened because at the time there wasn't a proper roadmap. There is a detailed and full roadmap here so I cant see much reason for it to fall too much more but WTFDIK!

[adamb1978] 11/6/2021 07:55

Decent trading update, and the clear forward guidance is helpful - should put a floor under the share price

[endion] 10/6/2021 22:07

Flying and marine dinos have been confirmed. Hopefully they add a bit more to the management side of the game this time too.

[pepsiman1] 10/6/2021 21:53

JWE2 was leaked in April 2019, including 2021 release.