Frontier Developments Share Discussion Threads

[mortal1ty] 30/8/2023 14:53

The other serious issue this faces... is most of the institutional holders are long-only growth investors who probably brought this when the company was a £500m+ market-cap. Suppose they brought 1.5% for their fund.

The position would be 0.5% in their fund now, and probably too small for their mandate, and definitely not a growth stock.

They can dump that 0.5% without impacting performance too much. Its an illiquid share. Will take a while but they are pretty price insensitive.

[p1nkfish] 30/8/2023 11:35

This was once Brabens baby.
Now looks like a case of child neglect.
Have they grown bored or just unable to drive this company well?
Something is missing.

[mortal1ty] 30/8/2023 09:41

I too spend time thinking how 'cheap' could Frontier get. The market can get pretty irrational at time. Only recently TinyBuild was trading below net-cash (this is a huge basket-case). Devolver Digital never got that cheap, but has a market-cap of £82m with £50m cash, and £100m sales (before the last downgrade). So that would put it on 0.3x sales.

Frontier I believe is a much better business than these two. However, if you strip out the £30m cash, it is a £90m enterprise value. If you think sales are going to come in below estimates, that puts it on c. 1x sales.

Another disappointment, and I could see this trading on 0.5x sales. Assuming cash drops to £20m, and sales are £90m... that would put it on £65m market-cap (which would be the lowest I could see it going). That would be about £1.60.

Given a turnaround seems a way off... I am inclined to wait to see if I can't get it closer to this before I dive back in.

[74tom] 30/8/2023 08:48

The bigger problem for gaming companies is capitalised development spend, it's a critical part of the picture but gets seemingly arbitrary accounting treatment (based on the 4 UK listed entities).

FDEV is sinking like a stone, they need to provide far more transparency on their medium term strategy for new games & likely significantly reduce costs. Certainly interesting to watch from the sidelines.

[p1nkfish] 29/8/2023 19:45

Full respect Cb1.

[cirlbunting1] 29/8/2023 19:39

Hello. Just providing figures of what comparable companies have gone for.

Both sales and EBITDA are widely used exit and entry multiples for P/E/investment banking firms.

Now, what you could have said was, "The multiples in which the aforementioned companies were valued at were in a bull cycle, we are currently in the bear cycle, so they hold less weight and are incomparable given current market conditions". In which I would have responded, "valid & fair point. However, given I stressed that I am a long-term holder - I hope those values will somewhat reappear as the economic cycle changes (eventually)".

As opposed to you saying "Using this to judge FDEV value is frankly utterly insane." There are ways to rebuttal sir.

[yankhanson] 29/8/2023 19:22

Cirlbunting, you know FDEV's EDITDA figure is at the discretion of the board, right? The higher the board choose to put it, the more they personally earn in profit-related bonuses. Using this to judge FDEV value is frankly utterly insane.

[yankhanson] 29/8/2023 19:16

Sbb1x, yeah. There's a X0,000 sale just before close every day. Sometimes two. It makes sense as a tactic for the bank to dispose of as much of their 7m shares as they can, before this drives the share price down to 1p. Which will be reached in about 8 weeks at the current rate.

[sbb1x] 29/8/2023 11:07

Still had 6.91% on that RNS.

[cirlbunting1] 29/8/2023 08:40

Bought back in, but this time I'll be long term holding.

Believe that if SUMO sold for ~13.2x revenue & 690x EBITDA, while CDM sold for ~11.8x revenue & ~56.7 EBITDA then there's some serious upside scope me thinks.

[yankhanson] 25/8/2023 16:59

Its the bank. See last week's RNS.

[sbb1x] 25/8/2023 16:33

Got a large seller

[yankhanson] 23/8/2023 17:17

FDEV announces date and prices for its next game release. hxxps://www.gamespress.com/Warhammer-Age-of-Sigmar-Realms-of-Ruin-is-summoned-from-the-Realmgate-

[thomstar] 23/8/2023 16:52

Sold earlier today

[weaverbeever] 23/8/2023 16:14

Quite a few scsw recommendations have halved in past 6 months. I know as a bought a few. So am considerably down. I didn't buy this one. But it's on my watch list now. Good luck all holders

[yankhanson] 22/8/2023 13:01

Ah, SCSW, the bunch who wrote about the JWE2 flop, "sales of the game have been lower than expected on the PC platform, which is down to [...] the fact that JWE1 had been boosted by a simultaneous film launch." Everyone with half a brain expects a film launch absence to lower sales...

[p1nkfish] 22/8/2023 12:11

Appropriate change would help promote new money to come in. As is, it's an avoid imho.

Disappointing execution.

[p1nkfish] 22/8/2023 12:08

Some very serious questions need to be asked of the management, their market knowledge & ability to launch product of sufficient quality to generate demand.

LACKING and change needed, probably at multiple levels from top down.

[aishah] 22/8/2023 11:41

Yes, they seemed to have been caught off guard on FDEV. Their investment is down by over 25%.

[yankhanson] 21/8/2023 13:50

SCSW ought to pay more attention to brokers such as FDEV's ex-NOMAD: "Analysts at Numis axed their target price for shares of Frontier Developments from 1,450.0p to 375.0p and downgraded their shares to 'sell', pointing to an assortment of potential headwinds bearing down on the game software developer and its ability to hit its own guidance."

[cestnous] 21/8/2023 13:26

This is definitely not what SCSW predicted

[lyndley] 18/8/2023 23:59

man that graph is insane, £34 down to £4 in 2 years

[yankhanson] 18/8/2023 22:57

mortality, to answer your question, the basis for my prediction of a 50% share price drop on the next trading update is the Steam analytics showing F1 Manager 2023 sales are down 75% on the previous year's version, and my expectation this will lead to a downgrade of FY24 guidance inc. increase in the losses from the current expected £5-10m.