In this equity research report, analyst Sebastian Fjellström take a closer look at Paradox Interactive, a Swedish game developer and publisher. With a strong pipeline of game releases in the coming 5 years an estimated revenue CAGR of 14.4% between 2022-2027E is justified. Although a good outlook the share is highly valued with much already priced in. A target price of 275 and a sell is recommended with a downside of 2.8%.
Investments highlights
- Best in class player retention rate in developed games contributes to better margins from sales of DLC
- A pipeline of 15 games will enable Paradox to 3-4 games per year for the coming 4-5 years likely ensuring future CCU growth
- Cities Skylines 2 releasing in Q3 2023 with an estimated 1.7-2 million units sold in the first month contributing to rapid top-line growth