Despite the recent rise in the KOSPI index, game companies SHIFT UP and Devsisters are struggling in the stock market. The market views these game companies as highly risky because they rely on core intellectual property (IP). With weak performance from existing IP and a gap in new releases expected to reduce revenue for the time being, investor sentiment has frozen solid.
According to the Korea Exchange (KRX) on the 5th, SHIFT UP's share price fell 7.15% over the past three months. The share price, which was 41,950 won on Aug. 4 this year, closed at 38,950 won the previous day. On Oct. 17 this year, the price fell to 37,500 won, marking a 52-week low. Its market capitalization also fell by half, from the 4 trillion won range at listing to the 2 trillion won range. As the slump continued, the National Pension Service, SHIFT UP's third-largest shareholder, also cut its equity. The National Pension Service raised its stake to 7% through concentrated buying in Aug. last year, but over the past few months moved to large-scale selling and lowered its stake to 5%.
During the same period, Devsisters' share price fell 9.24%, from 44,350 won to 40,250 won. Compared with Sept. 17 this year, when the share price was the highest in the past three months at 58,200 won, it plunged 30.84%. This contrasts with the KOSPI index, which surged 30.94% over the past three months.
Even so, both companies maintained growth through the second quarter of this year. SHIFT UP, which was listed on the KOSPI in July last year, was evaluated as a company with a solid financial structure. Starting with revenue of 58 billion won and operating profit of 35.6 billion won in the third quarter of last year, the company more than doubled to 112.4 billion won in revenue and 68.4 billion won in operating profit in the second quarter of this year. Its operating margin is 60.7%, among the highest in the industry. Devsisters also posted second-quarter revenue of 92 billion won and operating profit of 10.1 billion won, up 68.8% and 104.4% year over year, respectively. Overseas sales accounted for 77% of total revenue, sustaining robust top-line growth.
Nonetheless, the recent weakness in both companies' share prices stems from a clear slowdown tied to their dependence on core IP. SHIFT UP's gun-shooting action game "Goddess of Victory: NIKKE" and action-adventure game "Stellar Blade" have been driving revenue. However, recently NIKKE's China version fell short of expectations, and the PC version of "Stellar Blade" dropped out of global sales rankings just four months after launch. On Bilibili, China's largest game platform, NIKKE is ranked outside the top 50 in popularity, and "Stellar Blade" also fell outside the top 100 in Steam sales rankings.
Devsisters began by leveraging its flagship IP, "Cookie Run," as a mobile running game and has diversified into genres such as RPG, puzzle, and co-op action. Major titles include "Cookie Run: Kingdom," "Cookie Run: OvenBreak," "Cookie Run: Tower of Adventures," and "Cookie Run: Witch's Castle." However, "Cookie Run: Kingdom" likewise saw revenue decline more than 70% from the initial level after its launch in China. With no large-scale updates quarter over quarter and the launch effect of "Cookie Run: Tower of Adventures" fading, a decline in third-quarter results was signaled.
The lack of new releases has also sapped growth momentum. SHIFT UP's sequel "Stellar Blade 2" is expected to launch in 2027, and its next title "Project Spirit" is also in development targeting release the same year. However, the industry is raising the possibility that both projects could be delayed. SHIFT UP said it would announce the development direction of "Project Spirit" in the second half of this year, but has not yet disclosed specific progress. Devsisters said it will launch "Cookie Run: OvenSmash," which had been slated for release within the year, globally in March next year. The news appears to have dampened investor sentiment.
A gaming industry official said, "The recent decline in the two game companies' share prices reflects the limits of their high dependence on IP," and added, "With new releases delayed, concerns that a single IP cannot guarantee long-term growth appear to be priced in."