On Wednesday, Deutsche Bank (ETR:DBKGn) adjusted its financial outlook for Embracer Group AB, a video game holding company listed on the Stockholm exchange and over-the-counter in the United States. The bank's analyst set a new price target for Embracer Group shares at SEK 24.00, a decrease from the previous SEK 26.00, while maintaining a "Hold" rating on the stock.
The revision follows Embracer Group's first-quarter results for fiscal year 2025, which ended in June and revealed weaker-than-expected performance across several key operating metrics.
The company experienced a significant 23% year-over-year decline in organic growth. Particularly hard hit were the PC and console segments, which saw a 30% drop, and the Entertainment and Services (E&S) segment, with a staggering 52% decrease.
Despite a decrease in user acquisition costs leading to improved margins in the mobile segment, Embracer Group's overall adjusted earnings before interest and taxes (EBIT) were disappointing. Both the PC/console and E&S segments reported their lowest margins in nearly four years.
Adding to the company's challenges, Embracer Group announced a delay in the release of its highly anticipated game, "Kingdom Come Deliverance II." Initially slated for a third-quarter release, the launch has now been pushed to the fourth quarter. This postponement is seen as a missed opportunity, especially considering the strong seasonal demand for new games in the third quarter, which ends in December.
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