Case Study

Uncovering relevant insights that challenged an investment thesis and contrasted management guidance

  • 公募股权
  • 多行业
  • 欧洲

Ubisoft Entertainment SA (EPA: UBI) produces, publishes and distributes video games worldwide for consoles, PC, smartphones and tablets in both physical and digital formats. The stock had seen shareholder returns of nearly 500% over a 5-year period from 2013-2018. Despite negative stock performance in Q4 2018, management had been forecasting growth and improved profitability based on the strength of the Chinese market, an increase in digital revenue and emerging streaming opportunities. The overall investment sentiment remained bullish on UBI and the gaming sector, in general.

The insights on the gaming sector uncovered by Third Bridge were contrary to our thesis, which was quite positive. The credibility of their coverage and the thoughtfulness of their questions around “why” gave us the confidence to exit our position before the stock fell.

Analyst, London-based Long/Short Equity Hedge Fund

Research Insights

Third Bridge Forum has covered the gaming sector in-depth for the previous five years, mapping out key suppliers, publishers and distribution partners in major global locations (including China). Our research has explored several topics and extracted insights on a variety of issues including third-party and direct-to-consumer publisher distribution, Chinese market expansion and streaming opportunities, new release performance, digital revenue, in-game spend and player engagement trends.

Our interview transcripts unearthed a number of critical insights for equity investors, including viewpoints that contradicted Ubisoft company management. Furthermore, our research broke down, in granular detail, the different catalysts influencing sector underperformance and the magnitude of its impact on companies such as Ubisoft.

Outcome

Third Bridge Forum provided our clients with a number of insights that were contrary to Ubisoft management and sell-side analyst guidance. Our clients adjusted their positions before the steep decline, which took place three weeks after our initial interview.