11 bit studios shares plunge to 7-year low after publisher warns of possible $11.8 million write-off
Despite the recent success of Frostpunk 2, 11 bit studios has been struggling on the stock market. The fact that the Polish company may potentially cancel one of its projects in development has caused panic among investors.
Project P8
What happened?
On December 11, 11 bit studios announced that it may write off PLN 48.43 million ($11.8 million) related to the unfinished development work on one of its game projects.
“The Company cautions that in the event of the need to make a possible write-off, its final value will be known and published only after a review of the assets created in connection with the project,” the statement reads.
It is unclear which game 11 bit studios is referring to in its report, but DM BDM analyst Krzysztof Tkocz told Bankier.pl that it might be Project P8, which was first teased in 2021. The unannounced title has reportedly been in development since 2018. P8 was expected to launch next year, but was eventually delayed to 2026.
“In our opinion, investors should prepare for the worst-case scenario, i.e. the closure of the project, which will also involve a reduction in employment (the team at the end of Q3 2024 — 37 people) and a write-off included in the results for Q4 2024,” Tkocz noted.
How did the possible write-off affect 11 bit studios shares?
On December 11, 11 bit studios plunged more than 20% to PLN 200.5 per share. The downfall continued today, falling to as low as PLN 165.2. At the time of writing, the stock is trading at PLN 174.6 per share, down 30.7% over the last five days.
This is the second major drop for the publisher in 2024. In September, 11 bit studios shares plunged 36% following the release of Frostpunk 2. The launch sales of 350k units were below investor projections, who also expected the game to peak at 80-100k concurrent players on Steam (its actual peak CCU was 35.5k).
It is worth noting that Frostpunk 2 quickly recouped its development and marketing costs, reaching 511k copies sold on November 13. As a result, 11 bit studios reported record-breaking financial results, with its Q1-Q3 revenue and operating profit reaching PLN 106.6 million ($26.1 million) and PLN 53 million ($13 million), respectively.
Due to such a massive decline in just three months, the publisher’s stock is now down more than 67.8% year-to-date. The price of PLN 174.6 per share is also the lowest level since December 2017.
