Share Name Share Symbol Market Type Share ISIN Share Description
Frontier Developments Plc LSE:FDEV London Ordinary Share GB00BBT32N39 ORD 0.5P
  Price Change % Change Share Price Shares Traded Last Trade
  -75.00 -2.94% 2,475.00 30,728 16:35:23
Bid Price Offer Price High Price Low Price Open Price
2,485.00 2,495.00 2,560.00 2,475.00 2,560.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 76.09 16.22 41.30 59.9 974
Last Trade Time Trade Type Trade Size Trade Price Currency
17:38:50 O 50 2,475.00 GBX

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08/9/202118:18Frontier Developments - Elite gaming.....6,388

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Frontier Developments Daily Update: Frontier Developments Plc is listed in the Software & Computer Services sector of the London Stock Exchange with ticker FDEV. The last closing price for Frontier Developments was 2,550p.
Frontier Developments Plc has a 4 week average price of 2,425p and a 12 week average price of 2,095p.
The 1 year high share price is 3,470p while the 1 year low share price is currently 2,095p.
There are currently 39,343,699 shares in issue and the average daily traded volume is 54,067 shares. The market capitalisation of Frontier Developments Plc is £973,756,550.25.
adamb1978: Hi Sogoesit Many thanks for the compliments. I should clarify one comment, which I think came across wrongly looking at your reply. When I said "R&D spend for FDEV should taper off" I meant that the rate of growth should taper off. On the simplifying assumption that the same amount of engineering time is needed for each game, but only FDEV-developed games, then as there is an increasing amount of 3rd-party games which use FDEV's foundry offering, the proportion of R&D to revenue should decline (or similarly, the growth rate of R&D spend should decrease). Those 3rd party games will be lower gross margin but, per above, involve lower/no R&D spend...so net them might be similarly profitability. Operational gearing - you're probably right and the peers which I've looked at have EBITDA margins on average around 40%-45%, so in the same range of FDEV. Profit growth therefore comes from topline growth, and therefore its helpful that they're guiding to £160m - £180m in the year to May-23! Adam Adam
adamb1978: 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: 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
adamb1978: 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
nimbo1: 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: Interesting to see the above posts about various bugs. I bought into FDEV around 300p, though sold far too many on the way up, but trying not to let that long term position in the company influence my thinking or mean that I fall in love with the share. That said, my gut feel is that this is a blip in the long-term growth picture of the company and that the PE multiple for the year which we're about to start, which is somewhere in the 30s, is entirely reasonable given the growth of the business and market in general. I need to update my comps for them however believe that it will show that by May-22, with the share price where it is today, they'll be trading at a discount to the sector. I dont have a huge position now in FDEV (4% of PF) but I'm going to wait to see what the next TS says. Share price and company performances dont go linearly from bottom left to top right, and there are blips on the way, but I'd rather be invested in a management team who have delivered than take a punt on another (unless of course something fundamental has changed (eg management left, competition changed, market growth slowed etc). Assuming nothing has changed, my current, but slightly out of date, price for adding more is around 2400p and would add more if we get there. I think buying more will generate a decent return (>25% p.a.) on a 2-3 year basis. Adam
w13ken: FDEV share price quite likely to rise 10%+ in the coming fortnight with the full release of Elite Dangerous:Odyssey on PC and Steam tomorrow. There could be problems yet as the servers are scheduled to be down for 11 hours - hence an approx 7pm release in the UK - but this 'Space Legs' version of the game should be huge and get lots of coverage. Xbox and PlayStation releases are scheduled for this Autumn. There are many articles on the release today so here's a typical one and a very good launch trailer. hTTps://entertainment-focus.com/2021/05/18/elite-dangerous-odyssey-ready-for-pc-launch-tomorrow/ hTTps://www.youtube.com/watch?v=RAb3nH5Eilo
largemerlot: W13Ken - YH won’t do that. He’s been calling the business and share price down since £2.80 I reckon. Great correlation between YH nonsense and the share price. Most obvious reason for unrelenting nonsense? - financial pain
adamb1978: Need to go through my figures again later however I think we now have reasonably decent visibility over where this will get to in the next 3 years. I think turnover will be in the £170 - £200m range in FY23, giving EPS potentially in the 100p-130p range. I can see fdev share price comfortably getting to 2500p-3000p per share in that time-frame, assuming it doesnt get taken out before then. Happy to hold!
mark4231: I have RNS emailed to me for companies I'm interested in. I saw an F1 related RNS but didn't open it, as assumed it was some minor thing related to Codemasters - will look later I thought, totally not noticing it was an FDEV RNS. Only when I saw the big rise in FDEV share price this morning did I go hunting for the reason. :-) lol Well done FDEV! Wow!
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