[Edaily Reporter Kim Ju-hwan ] While the KOSPI continues its upward trend, the stock prices of major gaming companies— KRAFTON(259960) —appeared to be finding a bottom and rebounding but have since fallen sharply again. After briefly rebounding on expectations of a large-scale share buyback and earnings announcements, the stocks appear to have turned bearish once more amid concerns over weak third-quarter earnings and a lack of new game releases in the fourth quarter.

According to the Korea Exchange on the 12th, KRAFTON closed at 195,800 won in regular trading the previous day, a sharp drop of 20,700 won (9.56%) from the previous trading day’s closing price (216,500 won). At one point during the session, the stock fell as low as 190,100 won, threatening to breach the 190,000-won mark.

After hitting a 52-week low (178,500 won) at the end of last month, the stock showed signs of a rebound by recovering to the 220,000-won level early this month. However, it has continued its downward trend for four consecutive trading days, falling back below the 200,000-won mark. As a result, the stock’s year-to-date decline has now exceeded 20%.

The recent brief rebound in the stock price was driven by aggressive shareholder return measures. On the 3rd, KRAFTON announced that it would acquire an additional 300 billion won worth of treasury stock during the fourth quarter and cancel the entire amount to address the stock’s undervaluation. The total shareholder returns for this year—combining the reduced dividend (99.6 billion won) and previously canceled treasury shares—amount to 917.2 billion won, already approaching the minimum three-year (2026–2028) return target of 1 trillion won. Buoyed by this, the stock price rebounded by more than 15% over the course of a month.

However, investor sentiment cooled sharply as third-quarter earnings fell significantly short of market expectations. KRAFTON’s consolidated revenue for the third quarter of this year was 971.4 billion won, an 11.6% increase year-over-year. Operating profit plummeted 35.5% to 225.0 billion won.

These are disappointing results, falling 17.5% short of the market consensus for operating profit (272.6 billion won). Net income posted a loss of 68.4 billion won, reflecting foreign exchange valuation losses due to the weak dollar.

The primary cause of the poor performance is a sharp decline in revenue from the company’s flagship PC division. Third-quarter PC revenue totaled 238.9 billion won, down 57.4% from the previous quarter and 32.5% year-over-year. This decline was driven by the fading impact of early sales from “Subnautica 2” Early Access—which had driven second-quarter earnings—as well as the absence of major paid collaboration projects in the third quarter, unlike in previous years.

While the mobile division performed well, reaching 504.3 billion won (an 11.8% increase from the previous quarter) thanks to the success of intellectual property (IP) collaborations such as *Naruto*, *Ferrari*, and *Geomrae*, profitability deteriorated due to rising marketing expenses (65.0 billion won, a 50.2% increase year-over-year) associated with participation in events like Gamescom, as well as increased commission payments.

However, analysts note that the user base for core games remains stable. In the third quarter, the average peak concurrent users for PUBG PC on Steam was approximately 740,000, a decline of only about 7% from the previous quarter. Year-over-year, it maintained double-digit growth. This is interpreted as a temporary revenue gap caused by the release schedule for paid content being concentrated in the fourth quarter.

Among securities analysts, the prevailing view is that a full-fledged stock price rebound is unlikely until the fourth quarter. Kim Hye-young, an analyst at Daol Investment & Securities, stated, “Since there are no significant new releases until the fourth quarter and it is a seasonal off-peak period, a sustained upward trend in the stock price is unlikely,” while maintaining a “Buy (BUY)” rating and a target price of 310,000 won.

Lee Ji-eun, an analyst at KB Securities, also noted, “Although PC traffic and Steam revenue rankings are rebounding, driven by the Bentley collaboration in October and the IVE collaboration in November, it is difficult to expect a significant revenue rebound in the fourth quarter as it is a seasonal off-peak period,” adding, “The mobile segment is also expected to see a wider decline in revenue due to the off-peak season.”

A number of securities firms also lowered their target prices. EUGENE INVESTMENT & SECURITIES (300,000 won → 280,000 won), KYOBOSECURITIESCO.,LTD. (370,000 won → 340,000 won), and LS SECURITIES (340,000 won → 320,000 won) all lowered their target prices to reflect adjustments to earnings estimates for the fourth quarter and next year.

However, experts agree that since the current stock price has entered the lower end of its valuation range (the price-to-earnings ratio), investors should focus on the major momentum expected to gain traction starting in the first quarter of next year. The key drivers of a stock price rebound next year will be the 10th-anniversary event for its flagship IP, PlayerUnknown’s Battlegrounds (PUBG), and the upcoming lineup of new titles.

Ahn Jae-min, an analyst at NH INVESTMENT & SECURITIES, stated, “With PUBG planning a large-scale marketing campaign ahead of its 10th anniversary in 2027, we can expect solid growth next year as well,” adding “Given that 2027 is when the new titles we’ve been preparing will be released in earnest, as these new titles begin to deliver results, the company’s reliance on PUBG revenue will decrease, and valuations will recover alongside earnings growth,” he added.

In 2027, five new titles—including “PUBG: Deadnet,” “NO LAW,” and “Tare: Unbound,” which were unveiled at Gamescom—as well as the official version of “Enjoy” and “Palworld Mobile,” are scheduled to be released sequentially.

Kim Dong-woo, an analyst at KYOBOSECURITIESCO.,LTD., commented, “In 2027, updates for the 10th anniversary of PUBG PC are scheduled not only in March but every month, and substantial regional expansion is expected with the launch of a mobile version targeting entry-level devices.” He added, “Given that total shareholder returns this year amount to 917.2 billion won, management’s commitment to enhancing shareholder value has been confirmed.”

KRAFTON will sequentially launch a lineup tailored for Shinhung markets this month, including the low-spec version “BGMI Air,” which surpassed 14 million pre-registrations in India this month. Furthermore, the company is accelerating the diversification of its core IPs, as evidenced by its recent announcement regarding the production of a live-action Netflix series.