CD Projekt Loses a Third of Its Value on Game Bugs, Refunds

CD Projekt SA shares plunged for a third straight session after a slew of technical glitches in its long-awaited Cyberpunk 2077 game led the Polish developer to apologize and offer refunds to dissatisfied console gamers.

The shares closed down 7.6% in Warsaw, after tumbling as much as 25% during the day. The stock has now lost 33% of its market value since the first Cyberpunk reviews were published last week. The game became available on Thursday, the studio’s first major new title since 2015.

“The combination of very low user review scores, multiple bugs and now refunds by platforms mean that the larger part of the market is at best delayed, pending patches,” Jefferies analysts including Ken Rumph wrote in a note. “More weakness for the shares pending progress on technical solutions and clarity on the financial impact is likely.”

CD Projekt Loses a Third of Its Value on Game Bugs, Refunds

Reviews from previous-generation console users have been overwhelmingly negative: The PlayStation 4 version is rated 2.8 out of 10 on review aggregator Metacritic by 5,794 gamers, compared with a critic score of 90 out of 100 on PC. Analysts have said the opinions of players on older consoles may be crucial for CD Projekt’s revenue.

The studio posted an apology on Twitter to its customers on Monday, saying it “should have paid more attention to making it play better on PlayStation 4 and Xbox One,” offering refunds to those unwilling to wait for patches coming in January and February to remedy the situation.

While CD Projekt is now focusing on fixing the game, it expects sales of the console version to slow down, Chief Financial Officer Piotr Nielubowicz said on a call with analysts. The studio should see the scale of refunds in coming days, but hasn’t decided whether it will publish such data. The company plans to release strategy update in first quarter of 2021.

Cyberpunk 2077 sold more than 8 million pre-order copies and was before its launch estimated to become one of the best-selling video games of all time, according to a survey of 10 analysts by Bloomberg. Reaching previously estimated sales still “seems possible, but looks more challenging than we had expected,” Morgan Stanley analysts including Omar Sheikh wrote in a report on Monday, saying the firm should announce initial sales in the coming days.

Leading up to the release, CD Projekt shares nearly doubled in 2019 and had gained more than 50% this year despite hiccups resulting from three delays, the most recent of which was meant to ensure the game would run smoothly on older consoles. The surge saw it become the biggest stock in Warsaw, also briefly exceeding the top European developer Ubisoft Entertainment SA’s value this year. The developer has since relinquished both positions, its market value falling to 29 billion zloty ($8 billion).

“We are concerned that CD Project’s image as ‘players first’ has been seriously damaged in recent days,” Citigroup Inc. analysts including Rafal Wiatr wrote on Monday, cutting earnings estimates for the company by about a third for the three years through to the end of 2022. “Regaining confidence will take some time unfortunately and this is why we see the stock moving lower in the coming days.”

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