Frontier Developments Share Discussion Threads

[bamboo2] 19/12/2016 18:00

This hasn't really paused to make much of a flag or pennant at all, before taking off again. Seems in a real hurry, target price 276

[p1nkfish] 18/12/2016 11:56

Thanks bamboo, will drop a line when a close >= 44.5p. I think it could get through that in a quick jump though. It is now tightly held,

[bamboo2] 17/12/2016 14:50

p1nk, I have posted on UBI thread.

culford, thanks for the info on sales. I tend to buy the chart rather than the co, so am reliant on others for this kind of info. I'll post a chart in due course.

[culford] 17/12/2016 12:34

thanks bamboo
december is best selling month for games and planet coaster back up to 2nd in global charts today. its approval rating still >90% and it looks to be a big success for FDEV
meanwhile ED continues to sell steadily prior to its launch on PS$ in Q2 next year
would think the share price, which is where it was a year ago, has a lot further to go in next few months as market wakes up to the step change in revenues and profits from having a second successful game launched

[culford] 17/12/2016 12:22

thanks bamboo
december is best selling month for games and planet coaster back up to 2nd in global charts today. its approval rating still >90% and it looks to be a big success for FDEV
meanwhile ED continues to sell steadily prior to its launch on PS$ in Q2 next year
would think the share price, which is where it was a year ago, has a lot further to go in next few months as market wakes up to the step change in revenues and profits from having a second successful game launched

[p1nkfish] 16/12/2016 23:32

bamboo, would you happen to think UBI could form a flag pole?
I do. Just don't know when.

[bamboo2] 16/12/2016 14:01

hi culford, The flagpole is a term used to describe the particular chart pattern that is currently taking place. Sooner or later, its likely that the flagpole will end its upward move and form a consolidation zone. This zone is the flag or pennant [name depending on the shape it makes between the trendlines] at the top the pole. Flags are more rectangular, while pennants form triangles.

The flag is a short term pattern and can be very useful for determing future direction and target for the share price. Basically, the longer the pole, the greater the potential. Furthermore flagpoles preceeded by a flat base are known to outperform.

There is more info in this link,



edited for typo

[culford] 16/12/2016 02:39

whats a flag pole bamboo?

[bamboo2] 15/12/2016 18:08

Fantastic flag pole building here.

[p1nkfish] 13/12/2016 17:27

And close to Brexit fall-out immune.
VR headset adoption also a big positive.

[culford] 13/12/2016 13:19

Market seems to be waking up to the upside of this company.

Short term we should have three things happen in the next 6 months:
1. A trading update confirming the successful launch of PC and the step change up to a new level of revenues and profits with two games out in the market. As set out before, this is moving from revenues of £20m and broadly break even to revenues of £40m-60m and profits £10-20m.
2. An announcement on the third game to be self published by FDEV. On the basis of their success over many years and their ability to choose just one game from many ideas one can expect this to be of interest.
3. The launch of ED on PS4 in Q2 next year. This will be a combined ED& Horizons title and should thus be priced at c£40. If it is as successful as ED has been on Steam (remember there are 4x as many PS4 users as Steam users), or No Mans Sky was on PS4 this year, one can expect this to sell >1m copies and thus take sales up another step.

Longer term, over the next 5 years, FDEV has written about its wish to follow Activision and Electronic Arts. These two US giants are valued at $25-30bn and trade on 20x-25x forecast earnings. That is some way ahead but illustrates the potential of FDEV which is valued at less than £100m and which is probably trading at less than 5x 2017 earnings. It has £8m cash in the bank, 30 years of successful production history, a unique development software system that others in the industry wish to licence and a clear strategy to deliver great games and considerable shareholder value.

[hastings] 13/12/2016 08:43

Cheers Culford and some very interesting thoughts on numbers from you.

Regarding recruitment, there appears to be plenty of ongoing activity which is good to see.
FDEV was difficult to value on a number of fronts when it first came to market, particularly moving to that pure self-publishing model.

Much of that mist appears to be dissipating though and as things progress further the shares should surely attract a greater interest.

Looking forward to the update next month which should provide us with some further flesh on the bones, whilst I am now in the process of fixing up another visit to the main site in Cambridge.

[culford] 12/12/2016 12:27

Good article hastings

It would be interesting to know what assumptions Numos made for PC in those forecasts
The game is much more mainstream than ED and the actual sales seem to be tracking the alpha and beta signals by being 2-3x greater than ED. The price, however, is £30 rather than £40 and, the bulk of sales are through Steam rather than direct, taking net to 70% of £30 = £21. Thus if volumes are 2.5 x higher but net contribution is 1/2 than overall the benefit is c25% higher gross contribution. This would be a gross contribution for y/e May 2017 of £26m (in launch year ED generated £21m). Assuming existing one game sales and costs were c£20m and thus breakeven, it is hard to see there not being a significant upgrade in January on the £3.4m Numis pre tax forecast......

plus in Q2 2017 we have ED launching on PS4 which could easily double the size of that franchise (currently c2m units sold)......

plus in Q1 FDEV will also announce the 3rd game to be developed.....

hopefully the recruitment in Cambridge carries on for a good while yet

[culford] 12/12/2016 09:52

Directors buying is very encouraging albeit surprising. This is after period end and before a trading statement! To those of us following closely it looks as it revenues have moved up to another level with release of PC, which has a dramatic effect on profitability.

[hastings] 12/12/2016 09:36

Hi Culford, yes I caught up with David Walsh on Friday (David Braben unavailable) and have penned a piece which I will post when it goes up on the Cambridge News website.

Suffice to say, there really wasn't too much he could say,(understandable given the time)but hopefully, the piece will be of some relevance and contain a few interesting points.

I have been invited to go back for another visit in the New Year, which I will be taking up and I will most likely pen a much more in-depth article.

[culford] 12/12/2016 08:33

Did you get any update hastings?

The game is still 3rd in Global Top Sellers this morning and the top game not on sale. It has now been the top selling non discounted game over the past month which is 2nd busiest time of year, with coming month the busiest. SteamSpy is estimating that it has sold 350k games which is £10m through its biggest distribution channel in a month. Shares moving up now....

[culford] 09/12/2016 21:10

let us know hastings - interesting times for FDEV

[hastings] 09/12/2016 10:50

Catching up with management later today so will be penning something for next week.

[makw61] 09/12/2016 10:28

Hadn't seen the Numis forecasts so thanks for the post. Agree they look pretty achievable. £14m cash is roughly 40p per share, so stripping that out implies a forward PE of around 12.7, well below the market average never mind the average for similar companies. Can't see a lot of downside at this level and hence as p1nkfish says there are a range of possible upsides, some of which are quite sizeable.

I've some cash due in next week from the Lifeline Scientific takeover so I am tempted to pick up a few more of these. Just need the announcement of the next franchise now to complete a year of significant progress for FDEV.

GLA

[hastings] 09/12/2016 08:24

Numis forecast of 7.5p for next year followed by 13.4p doesn't look that aggressive given the progress and potential. And if 2018 expected net cash of £14m is also near the mark the shares should at last attract some wider attention.

[p1nkfish] 09/12/2016 08:00

Well rns released concerning ps4.

Future is an unknown but probabilistic outcomes suggest this is very undervalued if the expected plays out.

Pleased to say my average price is very reasonable and I wish all holders good luck.

[culford] 09/12/2016 01:46

Getting a bit carried away but No Man's Sky, which launched on PS4 and PC in August 2016, was estimated to have generated sales of $78m in that month!! It is now well behind ED in terms of users on Steam and SteamSpy suggests that it has sold slightly fewer games. It is widely regarded to have been over hyped. It does, however, show the sales potential of ED on PS4. With Planet Coaster selling well, and the PS4 launch for ED planned for Q2 2017, it is possible FDEV sales could hit £100m over next 12 months.......

[culford] 09/12/2016 00:04

Hastings
that is very significant news.

PS4 has sold 50m handsets and is on target to reach 60m by March 2017
To date, excluding Arena and Horizons, ED has sold 900,000 copies on Steam which has 12m users. That is a penetration rate of 7.5%

If it reached a similar penetration rate on PS4, i.e. 7.5%, it would sell 4.5m copes from Q2 next year. Assuming that the game sells at £40 (Horizons + Elite combined) and that ED receives 70% as is typical, it will receive 4.5m x £40 x 70% = £126m.

The Steam sales were achieved over 2 years, which would be a profit contribution of £63m per annum, almost the current market cap of FDEV. Coming on top of the success of Planet Coaster, this could be the cheapest stock on Aim right now!! It could be trading on 1x forecast earnings.