Square Enix Stock Plummets After Disappointing Q3 2024 Earnings

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Square Enix Stock Plummets After Disappointing Q3 2024 Earnings

Key Takeaways

  • Square Enix stock plummeted over 10% on November 11.
  • The decline is attributed to the company’s latest financial report, which revealed a 27% year-on-year operating profit decline in Q3 2024.
  • While Square Enix’s income for the six-month period ending September 2024 was still up compared to a year ago, investors seem to be skeptical about its near-term prospects.

As a long-time fanatic of Square Enix, seeing their stock plummet by over 10% is like witnessing Cloud Strife losing his Buster Sword to a mere slime – it’s hard to comprehend and leaves an unsettling feeling. The company’s financial report for Q3 2024 reveals a 27% year-on-year operating profit decline, which might suggest that the golden days of Square Enix are starting to fade away.

On Monday, November 11, Square Enix’s stock experienced a significant drop of more than 10 points. This decline resulted in a loss of approximately half a billion dollars from the company’s market value, which is believed to be due to Square Enix sharing some financially inconsistent figures in their recent report.

Square Enix’s profits have been dropping since their highest point in 2022, but their recent financial report indicates a possible change in this trend. Over the half-year period finishing in September 2024, they reported an operating profit of approximately $136 million – a year-on-year rise of 22%.

On Monday, November 11th, Square Enix’s shares continued to drop by more than 10% at the end of trading on the Tokyo Stock Exchange. Some experts in the Japanese gaming industry are attributing this downward trend to some concerning figures in Square Enix’s recent financial reports. For instance, while the operating profit for the six-month period showed an increase compared to the previous year, it has been steadily decreasing, falling by 27% in Q3 of 2024. Additionally, sales of premium games have also dropped compared to the same time last year. This decline could potentially explain the recent wave of selling by investors that led to Square Enix’s stock price drop.

Square Enix Lost $350m in Market Cap Since the Start of November 2024

In early November 2024, Square Enix was appraised at a total value of $4.68 billion, determined by its stock price and the number of shares in circulation. Interestingly, just after publishing its most recent consolidated financial report over the weekend, its valuation dropped by around $350 million. Although stock prices may not always accurately represent a company’s current state, they can serve as an indicator of investor sentiment. At present, it seems that investors are not overly optimistic regarding Square Enix’s short-term future prospects.

The most recent financial report from the Japanese team did not disclose sales figures for Final Fantasy 16, a title they had earlier acknowledged experienced underperformance. The role-playing game saw a relatively subdued debut on PC following its arrival on Steam in September 2024. Square Enix previously announced that over 3 million copies of FF16 were sold on the PS5 during its launch week in June 2023, but more recent sales estimates suggest that only approximately 289,000 units have been sold on Steam as of November 11, based on a compilation of third-party data from Gamalytic, VG Insights, and PlayTracker.

In the future, Square Enix aims to boost its dwindling game sales by adopting a multi-platform publishing approach instead of sticking with exclusivity deals. They made this clear back in May 2024 when they declared their intention to actively pursue this strategy. However, before making this transition, Square Enix will still launch at least one more timed exclusive for the PS5, which happens to be the final installment in the Final Fantasy 7 remake series.

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2024-11-11 18:24