Devolver Digital stunned shareholders today when it lowered its full year sales guidance citing "a competitive release window" among other factors. Shares of the company, which is traded in England, crashed over 48% on the news.
Devolver began trading on the London Stock Exchange just last year, valuing the company near $1 billion. DEVO shares hit £185/share and a low of £167/share on that first day of trading. After today's massive selloff, shares currently sit at £70/share down 62% from the high on its first day of trading in November 2021.
"Sales from new games released in the first five months of FY22 have been slower than expected, reflecting a competitive release window and specific factors for each title which are being actively addressed for future titles," said the company on its investor relations website that blocks United States IPs from accessing it. Devolver's board did try to soften the blow to the share price today stating that the company "expects revenues and profit to be weighted towards the second half of FY22, supported by highly anticipated new title releases, strong demand from subscription platforms and continued evergreen back catalogue sales at year-end."
Devolver now expects earnings before interest, taxes, depreciation, and amortization (EBITDA) to come in between $27-32 million and revenues to come in between $130-140 million during the full year 2022.
A lot of companies that have gone public in the last few years have seen their stocks get clobbered, so today's story isn't unique to Devolver Digital. It still highlights the tough year-over-year numbers that many video game companies face coming out of the pandemic. It is also important to remember that US consumers had stimulus checks at the beginning of 2021, which is another headwind we have seen affect many companies' earnings reports over the past few quarters.