Meritz Securities said on the 1st that Pearl Abyss' new title "Crimson Desert" has started to gain traction in China, and it expects earnings growth ahead. It maintained its "buy (BUY)" rating and raised the target price to 100,000 won from the previous 62,000 won. Pearl Abyss closed the previous session at 69,000 won.
Lee Hyo-jin of Meritz Securities said, "Crimson Desert, boosted by viral spread as gamers voluntarily produce short-form content, surpassed its previous peak in concurrent Steam users over the weekend despite being in its second week," and added, "It is becoming clear that the addictive nature and high buzz of shorts can have a positive effect on the game."
Analysts also said there are signs of a response in the Chinese market. Lee said, "After the 'sense of organization' patch over the weekend, shorts went viral on Douyin, China's TikTok, pushing the revenue ranking up to No. 3," and added, "Considering that it generally takes two to three days for shorts to convert to purchases, we expect to start seeing the effect from this weekend." Meritz Securities assumed second-quarter sales in China at around 2 million units.
They also projected that Crimson Desert will enter a full-fledged profit leverage phase. With the Steam platform effect and users' voluntary short-form-based marketing working in tandem, they said 2025 results could reach twice the market's expectations.
In addition, the outlook for downloadable content (DLC) sales, expected to be revealed in the second year after launch, is being revised upward. Lee said, "While mobile game companies tend to trade at about 15 times valuation, console game companies often transact at above 20 times," and added, "Considering the potential for earnings upgrades, valuation appeal, and possibilities for global collaboration, Crimson Desert still has ample room to grow."