$11B (-2 %) a promising bet for courageous investors

Polish video game developer 11 Bit Studios on Friday announced its latest game Frostpoint 2 on Friday and subsequently fell by more than 50% to the lowest level in the company's history - i.e. lower than at IPO 4 years ago.

Now you might think that this was because the game had a bad start. But why is that? Well, not really. Although the press praised the game to the skies, the release weekend was more of a disappointment for analysts. Only slightly less than half of the sales analysts had hoped for were achieved and player ratings were only 71% positive instead of over 80%.

Why is that? If you take a closer look at the ratings, there are actually no fundamental problems with the game. Technically, the game works flawlessly and the design is also well done. However, players criticize that the game takes a different artistic approach to the first part and that they would have liked "the same as always". Nevertheless, the critics also emphasize the fundamentally high production quality.

Developer 11 Bit has also already announced that the game has already sold 350,000 copies and has therefore recouped all production and marketing costs. This means that the game is already making a profit. How high this profit will be is now the crucial question.

I am of the opinion that the expected profits of 11 Bit Studios are currently underestimated. On the one hand, the analyses do not take into account the fact that Frostpunk will not only make a profit through copies sold, but that the game is also included as a day one release in the Gamepass from $MSFT (+0,61 %) is included. Many players (including me) will of course take the opportunity to "borrow" Frostpunk and play it through instead of buying it at full price. These license revenues - which could be considerable for a Day One release - are probably not yet properly priced in at the moment.

In my opinion, there are also other major sales drivers to come. The Christmas and winter period will provide another decisive tailwind. We can also expect the release for consoles in 2025. A mobile spin-off of the original Frostpunk will also be released next month. However, no risks are being taken here and the development is being outsourced to a South Korean company, which means that if it fails, virtually nothing will happen and if the classic game is a surprise hit with over 5 million units sold, further license fees will rain down on the Polish capital Warsaw.

I find the entry at 11 Bit very interesting at the moment, but I will wait until next week when the bottom forms. After that I see a price potential of 40-70%.

(No investment advice. Investments in everything except stones carry the risk of a total loss)