CD Projekt RED shares fall to March 2019 levels in 24 hours after the announcement of a change in strategy

In daytime trading on March 31, the value of CD Projekt RED shares fell by 14.5%. At the time of writing, the company’s shares are traded at 186 zlotys($1 = 3.9693 zlotys). The sharp drop occurred after the announcement of CD Projekt RED to restructure and change the strategy of game development.

On March 30, CD Projekt RED revealed that it will change the approach to game development. From 2022, the company will be working on two large AAA projects at the same time. New games will include online elements, but the developers will continue to focus on the single-player experience. As before, CDPR plans to mix several genres in new RPGs to attract new audiences.

The company also announced that the Cyberpunk 2077 multiplayer title will not be its next game, as it wants to “focus on bringing online all the franchises rather than a massively multiplayer game.”

“This leaves us with much-reduced revenues in 2023 and no certainty on when there might be another revenue spike,” Barclays analysts said in a note, keeping their “underweight” rating on the stock.

Some analysts were also disappointed by the company’s decision not to give a timeline for key games beyond this year. However, Jefferies analysts said they did not believe this signaled there would be any delays.

“The adoption of a stealth approach protects staff and likely marks a low point in sentiment, we believe,” they wrote.

BOS Bank analyst Tomasz Rodak said the studio’s plan for the gradual introduction of multi-player features to existing single-player games may trigger a negative market reaction. Bernstein’s Littunen noticed a “lot of confusion” about multiplayer modes.

“Investors expected drivers for future monetization, such as a separate multiplayer version,” Rodak said. “The lack of such plans may be a disappointment.”

Once among Warsaw’s best-performing stocks, CD Projekt shares tumbled as much as 53% since Cyberpunk launched in December. They declined 9.1% on Tuesday after Monday’s 13% advance as investors weighed the latest fixes to the Cyberpunk game along with expectations for the company’s strategy update.