Path to Cyberpunk Profit Unclear in CD Projekt Strategy Update

Polish studio CD Projekt SA underwhelmed investors with its strategy update, which left questions about the development of its botched Cyberpunk 2077 release unanswered.

The Warsaw-based company, which lost about half of its market valuation since December’s highs, said it plans to make Cyberpunk available for next generation consoles in the second half of this year. But it gave little guidance over the value of “add-ons” in the game, the expected timing of its return to Sony Corp.’s PlayStation store or the potential for multi-player modes.

It declined to give details on plans beyond 2021 and provided almost no financial details, saying dividends will be made “when viable.”

”We went in with pretty low expectations and that seems to have been the right thing to do,” said Matti Littunen, an analyst at Bernstein Autonomous LLP. While he expected company to avoid precise timing of its longer-term pipeline due to Cyberpunk delays, he awaited more details on add-ons and “more tangible” governance changes.

Path to Cyberpunk Profit Unclear in CD Projekt Strategy Update

With its reputation damaged by the much hyped and badly glitched Cyberpunk release, as well as a hacking scandal that has delayed work on fixes to the game, CD Projekt somehow maintained its “mission” to be among the world’s top three developers.

“It’s part of our new policy not to build too much expectations,” Chief Executive Officer Adam Kicinski said during a call with investor and reporters on Tuesday. After CD Projekt was forced to pull out all the stops to fix Cyberpunk, Kicinski said he wants to “enhance” the studio so it will be able to simultaneously work on two AAA-standard games, starting next year.

The company plans to be more active in acquisitions of rival studios to increase its development potential. It announced a purchase of Canada’s Digital Scapes on Tuesday.

‘Step by Step’

CD Projekt plans to add online content to Cyberpunk “step by step,” saying that it’s not working on a “big,” separate online experience game. It didn’t give a precise timeline for multiplayer add-ons, seen by analysts as a key milestone for the franchise. It also refrained from guiding investors about the potential date for the launch of a new version of its Witcher medieval role-playing game that first put the studio on the map.

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.

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