Year After Cyberpunk Debut, CD Projekt No Nearer Redemption

(Bloomberg) -- A year since the botched premiere of CD Projekt SA’s Cyberpunk 2077, things haven’t got a whole lot better for the struggling Polish video-game studio.

The shares are down 54% in that time and analyst price targets indicate a further 15% downside over the coming 12 months.

It’s a far cry from the hype that surrounded the launch of the futuristic role-playing game that had been touted as the next in a line of blockbusters that culminated with the third installment of the Witcher series in 2015.

Where analysts had originally expected Cyberpunk sales of 30 million units in the year after the game’s release, they now expect 17.3 million copies to have been sold in that time, according to the average of nine estimates compiled by Bloomberg. That includes 13.7 million sold in pre-orders and at around the time of last year’s launch.

“2021 has illustrated how long and bumpy the road to rehabilitation will be,” said Matti Littunen, an analyst at Bernstein. “Fixing Cyberpunk, which is the key for audience relationship, will take a while.”

Even as Cyberpunk is finally getting better reviews thanks to multiple patches, redemption remains distant. In 2022, when the studio plans to release a new, technically advanced version of the game for next-generation consoles, analysts see sales rising to only 5.3 million units from 3.6 million for 2021. They are also uncertain about average prices, as Cyberpunk is continues to be sold at a discount to its launch price of $59.99.

Apart from lower-than-expected sales numbers, the company has also faced legal challenges after it was sued in a California district court by investors who lost money betting on Cyberpunk’s success. The plaintiffs don’t directly hold CD Projekt stock, they have bought American Depository Receipts that trade on U.S. exchanges and aren’t sponsored by the company. The ADRs lost 59% since Dec. 10, 2020.

In the lawsuits, they accused CD Projekt and its managers of misleading investors by saying that the game was complete and playable ahead of the debut. Shortly after the release, the game was pulled from Sony Group Corp.’s Playstation store, only to return there in June this year.

This week, the company announced it started talks to reach an agreement with the plaintiffs. CD Projekt declined to comment on the chances of a potential settlement when contacted by Bloomberg but said that the “potential settlement should in no way be construed as acceptance by the company or members of its management board of any allegations expressed in the plaintiffs’ court filings.” The deadline for the settlement draft is Jan. 13.

Until now, CD Projekt hasn’t released new data for unit sales. Third-quarter revenue missed estimates, underlining worries that Cyberpunk’s glitches will drag on its popularity for longer. There’s also concern that the studio’s efforts to improve Cyberpunk hamper work on other projects, including a possible next version of the Witcher game.

“There’s a high risk that there won’t be any upside, especially as the company trades above fundamentals and will depend on revenue from one game only for many years,” said Piotr Bogusz, an analyst at Erste Securities Polska SA.

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