A recent financial forecast has got some experts worried about Ubisoft. Bernstein analyst Aleksander Peterc, for one, isn't impressed with the game company's performance. On September 26, he gave Ubisoft a 'Sell' rating and set a price target of €19.00. What's behind this pessimistic outlook? A couple of things.

First off, Ubisoft had to lower its expectations for the upcoming fiscal year (FY25). Initially, they thought net bookings would be in line with what everyone else was predicting. Now, though, they're saying it'll be 20% less than that. This means a potential 16% drop in revenue compared to last year—not good news for growth.

Additionally, Ubisoft's second-quarter forecast has taken a hit too. It's now lower than what they previously thought and what the market was expecting. This is a big deal because Ubisoft relies heavily on its own games. With these lower expectations, their bottom line might barely break even this fiscal year—if it does at all.

Two of Ubisoft’s recent game releases haven't helped either. The sales for Soft Star Wars Outlaws were disappointing from the start, and Assassin’s Creed Shadows has been delayed. These setbacks have added to the gloomy outlook for FY25.

Even though Ubisoft claims it has enough money to keep going and is meeting its loan conditions, the decline in its key metrics tells a different story. It suggests that Ubisoft’s financial flexibility is shrinking fast. This is especially concerning given how much Ubisoft’s stock price has dropped since July—almost 50%.

So why is all this bad news? For investors, it means being cautious about buying into Ubisoft right now. That's the main reason behind Peterc's 'Sell' rating. He wants people to be aware of the risks before they make any moves with their money.

Ubisoft’s Bleak FY25 Prediction: Why Sales Slump Matters More Than Ever

Actions