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    Video game maker CD Projekt rises after strategy update, share buyback

    CNA – Shares in CD Projekt trimmed early gains yesterday as investors chewed over the Polish video game maker’s line-up of new games that analysts said could boost growth, but also increased risks.

    The stock jumped nine per cent at the open after the company on Tuesday announced long-term plans for new games in its two core franchises, the Witcher and Cyberpunk, and a new original game.

    It also launched a share buyback for up to PLN100 million (USD21 million).

    “We see the goals announced by the company as ambitious and their implementation will allow it to reach a new, much higher level,” BDM brokerage analysts wrote.

    They flagged risks related to shifting from CD Projekt’s previous practice of focussing on one big-ticket game to developing several projects simultaneously.

    Credit Suisse analysts estimated in a note that if the new games generated the same revenue over four years as the Witcher 3: Wild Hunt had, its revenue forecasts for 2023-2030 would increase by PLN4.6 billion to PLN17 billion.

    Boxes with CD Projekt’s game Cyberpunk 2077 are displayed in Warsaw, Poland. PHOTO: CNA

    CD Projekt released the first game in the Witcher medieval fantasy franchise in 2007 and added another with Cyberpunk 2077 in late 2020.

    Its production cycle has usually taken four-to-five years.

    “The announcement of the Witcher saga or a new IP gives hope for a more expansive development in the future than previously expected,” Managing Director at Poland’s Retail Investors’ Association Piotr Cieslak told the media in an e-mail.

    He noted that multiple, simultaneous projects would likely come with higher costs and shareholders would need to wait to see the impact.

    Credit Suisse analysts noted that adding about 400 staff, as CD Projekt forms a new studio in North America, could increase development costs by 50 per cent as it pays higher United States (US) salaries.

    “This could lead to some sizeable near-term profit reductions, in our view. The first positive impact on revenue might not be until 2026,” they wrote.

    The stock, which has lost around 40 per cent of its value so far this year, trimmed earlier gains and was up around 2.4 per cent at PLN110.96 as of 0918 GMT.

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