1. What Happened to Webzen?
Webzen recorded sales of KRW 39.1 billion (down 32.4% year-on-year), operating profit of KRW 6.2 billion (down 50.5% year-on-year), and net profit of KRW 6.8 billion (down 93.9% year-on-year) in Q1 2025. These figures fell short of market expectations by 4% and 28% respectively, marking a significant earnings shock.
2. What Caused the Sharp Decline in Earnings?
- • Declining sales of major IP games and delays in new releases
- • Deterioration in profitability due to a high fixed cost structure
- • Unexpected increase in other losses
- • Decrease in overseas sales due to the weakening Euro and Dollar
3. What’s Next for Webzen?
Downward pressure on stock prices is expected in the short term. However, in the medium to long term, the global recognition of the ‘MU’ IP and efforts to strengthen development capabilities can be positive factors. The success of future new releases will be a crucial variable in determining Webzen’s growth.
4. What Should Investors Do?
Short-term investors: Selling or reducing holdings is recommended. The risk of stock price decline is high due to poor performance and falling short of expectations.
Long-term investors: Careful observation is recommended. It’s necessary to confirm new game momentum and tangible results for an earnings turnaround.
Frequently Asked Questions
How was Webzen’s performance in Q1 2025?
Webzen recorded an earnings shock in Q1 2025, with sales of KRW 39.1 billion, operating profit of KRW 6.2 billion, and net profit of KRW 6.8 billion.
What are the main reasons for the poor performance?
A combination of factors contributed, including declining sales of major IP games, delays in new releases, a high fixed cost structure, an unexpected increase in other losses, and a weak exchange rate.
Should I invest in Webzen?
Selling or reducing holdings is recommended in the short term due to the high risk of a stock price decline. In the medium to long term, it’s advisable to make investment decisions after confirming the success of new game releases.