Shinhan Investment & Securities lowered its investment rating on Devsisters(194480) to "neutral (Hold)" on the 14th, saying the stock lacks investment appeal until earnings improve and capabilities in new releases become evident. Devsisters' previous day's closing price was 17,600 won.
Kang Seok-oh, an analyst at Shinhan Investment & Securities, said, "Despite the U.S. performance of 'Cookie Run: Kingdom,' the share price plunged due to expense controls and the failure of new releases to gain traction," adding, "With a swing to a loss, a short-term rebound is difficult, and it will take time to restore earnings and trust."
In particular, the analyst viewed the loss as stemming from excessive expansion into new businesses and marketing spending relative to cash flow. Kang said that until an improved financial structure and earnings are visible, the stock lacks investment appeal.
Kang said, "A repeat of losses for the same reasons as in 2022–2023," and analyzed, "Expanding awareness of the Cookie Run intellectual property (IP) succeeded, but trust in expense efficiency declined."
Shinhan Investment & Securities projected Devsisters' second-quarter results this year at operating revenue of 52.3 billion won, down 43.1% from a year earlier. It also expected a swing to an operating loss of 16.8 billion won.
Kang said, "Losses continued as cash flow from existing titles was not maintained and new businesses and marketing were expanded," and forecast, "Although workforce optimization and expense controls have begun, due to planned fixed-cost expenditure carried over from the prior quarter, cost-saving effects will likely be confirmed starting next quarter."
He also estimated that after the previous quarter's update, "Cookie Run: Kingdom" is seeing unstable fandom and revenue persistence, and the new title "Oven Smash" fell well short of market expectations, likely generating 3.6 billion won in second-quarter revenue.
It was analyzed that if upcoming titles become hits, there is a possibility of turning to profit.
First, on the 22nd of last month, "Cookie Run Classic" launched globally and was estimated to have received positive user responses in Thailand. In particular, the highest single-day revenue was estimated at 200 million won. However, verification of sustainability will be necessary.
The idle RPG using the Cookie Run IP, "Cookie Run: Crumble," is expected to launch at the end of this month or early next month. The game reached 1 million pre-registrations in three days, and based on the high accessibility of the growth genre, revenue is expected to exceed that of "Oven Smash."
Kang forecast, "With strong expense controls, plus the Cookie Run IP's Augmented Reality (AR) game 'Project AR' and the new 2D platformer IP 'Project Misch,' a turnaround to profit will be possible in 2027."