Games Workshop in the FT Blog

[Rusted Boltgun]

I've seen mention of this in the Tone Pro thread and our esteemed Frater, 'im wit da foil, has produced a video on it.

 

@01RTB01 this may be of interest to you

 

FT blog article

 

Valrak's video

 

There is also an article in The Times but it is behind a paywall. It is referenced in this IGN article, FWIW

 

IGN article

Edited October 12 by Rusted Boltgun
Moar bloat

[Doghouse]

[phandaal]

1 hour ago, Doghouse said:

 

N1SB will give the actual correct analysis, but until he gets here, here is the TLDR from The Times and Financial Times:

 

This involves a confidential report from Dragoneye, a firm specializing in research on potentially overvalued stocks.

 

Concerns include:

- Revenue per store and third-party retail outlets is weakening despite continued expansion

- 11th Edition reportedly performed below expectations

- Price increases may be discouraging purchases and reducing customer engagement

- Questions about whether GW can continue expanding its customer base and sustaining demand

- More third-party sellers offering discounts could pressure margins and complicate inventory management

- Investors may have overestimated GW's ability to maintain historical growth rates

- US tariffs and other rising costs

[Mazer Rackham]

10 minutes ago, phandaal said:

- US tariffs and other rising costs

 

You chaps across the pond, pouring all that Nuln Oil into the harbour.

 

There'll be tears, I'm warning you, yes sir.

 

[darkhorse0607]

26 minutes ago, phandaal said:

 

Price increases may be discouraging purchases and reducing customer engagement

 

 

shocked if that turns out to be a big factor (amongst the others)

 

shocked I tell you

 

_{its because they haven't released black legion 3}

Edited October 12 by darkhorse0607

[lansalt]

Sounds to me like a group of investors tried a pump-and-dump scheme with GW stocks, but it backfired because the company is not interested on that kind of market manipulation. 

That Dragoneye report doesn't state anything new to those following the company, but it seems targeted to trigger a specific reaction from the market.

[Joe]

Dragoneye have a reputation for putting out hit reports with the explicit purpose of shorting stocks at successful companies to allow predatory investment firms (i.e. almost exclusively American market equity groups). They carried out the same practice with a few British pharmaceutical firms around the mid-stages of COVID.

 

This is not the first time it's happened - and it certainly won't be the last. (It is also rather telling that the content they put out screams of basic AI-scraping from internet forums and social media sites, rather than based in any equitable reality...)

[phandaal]

12 minutes ago, lansalt said:

That Dragoneye report doesn't state anything new to those following the company, but it seems targeted to trigger a specific reaction from the market.

 

5 minutes ago, Joe said:

It is also rather telling that the content they put out screams of basic AI-scraping from internet forums and social media sites, rather than based in any equitable reality...

 

Where did you guys find the report? I was only able to access the two articles themselves.

[Brother Lutheriel]

Valrak seems to think this will have a positive effect for the actual consumers and hobbyists. I’m not sure anything outside of a real threat to the monopoly will change much. 

[Scribe]

54 minutes ago, phandaal said:

- 11th Edition reportedly performed below expectations

 

As a continuation of the 10th Beta Test, I'm shocked by this!

[Xenith]

1 hour ago, phandaal said:

Concerns include:

- Revenue per store and third-party retail outlets is weakening despite continued expansion

- 11th Edition reportedly performed below expectations

- Price increases may be discouraging purchases and reducing customer engagement

- Questions about whether GW can continue expanding its customer base and sustaining demand

- More third-party sellers offering discounts could pressure margins and complicate inventory management

- Investors may have overestimated GW's ability to maintain historical growth rates

- US tariffs and other rising costs

 

All of these things were true in 2016 and before. They probably looked at the situation now but not the historical environment.

 

I did see somewhere that this company produces skeptical reports about companies to drive down stocks then buy the bounce. 

[MARK0SIAN]

It’d be nice to think we were finally hitting the break point where the ever increasing prices caused a reduction in purchases that outweighed the additional profit they get from said increase. 
 

It’s GW though and normal market rules don’t seem to apply to them so I won’t hold my breath.

[firestorm40k]

If you read the IGN article, it ends with this little tidbit:

 

Quote

And, at the time of this article’s publication, Games Workshop’s share price was up 1.22%. The Emperor, it seems, protects.

I think @lansalt and @Joe are correct - this is a market manipulation by an ‘investment’ firm that looks to get pay outs when stock values drop. Although there are one or two valid points, e.g. drop in income from their retail stores, but otherwise this is a bit of a non-story; this fluctuation isn’t an indication of GW’s imminent financial collapse 

[Blissful Brushes]

The reality for most of us is that we will probably buy what we want to buy irrelevant of the price, because we’ve always done so, many of us for decades and we’re more indoctrinated than a Black Templar.

 

The stores were certainly better 20 years ago when I was a child but they give GW massive visibility on the high street which probably pays back its weight in gold that can’t really be quantified. They remind us, they remind the people whose only real interaction with GW is SM2 that the hobby exists and probably pulls in millions for them.

General economic factors probably haven’t helped them but I don’t think I’ve ever seen a GW store empty in my life, no matter the town, Combat Patrol/Spearhead is always sold out in Tesco. They’re still moving their little soldiers at a fair rate of knots.

 

Im not that inclined to pay much attention to a site whose primary purpose seems to be attempting to generate market turmoil/opportunities. 

[Mechanicus Tech-Support]

1 hour ago, phandaal said:

 

 

Where did you guys find the report? I was only able to access the two articles themselves.

Ah that's the thing you see, you only get the report if you sign up (and pay) for a Dragoneye subscription

I did find it humorous that in one of the articles its mentioned no one likes/wants to call a top for GW stock price because as a company GW is *weird* 

[SvenIronhand]

3 hours ago, phandaal said:

- 11th Edition reportedly performed below expectations

 

Probably because the starter set wasn't all that exciting.

[Marshal Rohr]

Don’t forget the oil shock and consumer spending contraction that hasn’t fully resolved for American GW fans yet. They have Vegas/Disney’d themselves with the last few price rises. 

Edited October 13 by Xenith
Needlessly crude

[N1SB]

I'm responding to Brother Doghouse's signal, but at this slow speed, I'm less the Batman and more like Gotham PD.

 

The key here is revealed by the Financial Times Blog, but it is NOT LIMITED to just them.  Even investment organisations create hype for the sake of creating hype:

 

 

I was trying to find my own post, anticipating that the share price will come down after the recent annual report simply because GW has a 3-year cycle; its flagship products of 40k, AoS, 30k has 3-year life cycles.  40k is the spike then it dissipates for 2 years, and that the time to buy GW stock is between after a 30k's year's annual report and before 40k's half-year one, because that's when it'll generally be lowest.  This period is GW's regularly occurring Long Winter.

 

Disclaimer: I actually have some connection to Dragoneye, I found.  We're distant cousins in a profession sense.

 

Please continue to discuss.  I need a moment to organise my thoughts.  I know what I want to say, I've been meaning to for awhile.

[Lathe Biosas]

5 hours ago, N1SB said:

I'm responding to Brother Doghouse's signal, but at this slow speed, I'm less the Batman and more like Gotham PD.

 

Don't sell yourself short. Remember in 2015/2016 you could be Gotham PD AND Batman.

(60 year old Jim Gordon became police- Batman for a bit.)

[Craig]

11 hours ago, phandaal said:

 

Concerns include:

- Revenue per store and third-party retail outlets is weakening despite continued expansion

- 11th Edition reportedly performed below expectations

- Price increases may be discouraging purchases and reducing customer engagement

- Questions about whether GW can continue expanding its customer base and sustaining demand

- More third-party sellers offering discounts could pressure margins and complicate inventory management

- Investors may have overestimated GW's ability to maintain historical growth rates

- US tariffs and other rising costs

All valid points and there are more besides. I don't expect GWs management to re-evaluate their course based on this though. I think valrak was being far too optimistic. More price rises and staff cuts are usually the way to please the spreadsheet speculators unfortunately.

[DukeLeto69]

It will be the longterm view that matters and, unless they royally screw it up, the Film & TV deal with Amazon MGM (looping in United Artists “imprint”) will be a game changer (not a TT GAME changer, you know what I mean) for the shares.

[Xenith]

41 minutes ago, Craig said:

All valid points and there are more besides. I don't expect GWs management to re-evaluate their course based on this though. I think valrak was being far too optimistic. More price rises and staff cuts are usually the way to please the spreadsheet speculators unfortunately.

 

I don't think GW plan on the cuts as they have been building manufacturing capacity - this is just part of a natural cycle of stocks (look at the drop in 2021/2022 then rebound to all time highs). 

[Antarius]

It probably also pays to remember that stock values are weird. They're not really tied to company performance, merely to the perception of whether the stock values will go up or down in the future.
 

That being said, if GW stock plummets, I'll definitely consider sweeping up a bunch of them.

[Craig]

26 minutes ago, DukeLeto69 said:

It will be the longterm view that matters and, unless they royally screw it up, the Film & TV deal with Amazon MGM (looping in United Artists “imprint”) will be a game changer (not a TT GAME changer, you know what I mean) for the shares.

If I'm being honest I do expect them to screw it up. I'm no GW hater, just an observant hobbyist but looking at how they operate currently they are doing an awful job at attracting new customers. They have priced young people out of the hobby completely. There is nothing you can buy from GW with pocket money like you could do less than 10 years ago when 8th first came out. Looking at GWs website there is almost nothing in the "getting started" section of their shop for under £100. Curious customers who have 8 hours of TV as their only exposure to a space marine are going to balk at the cost of entry and that's the last you'll see of them. If their hope for a cash explosion is investing tens of millions in to an Amazon TV show hoping for hundreds of millions as a return I think they will be disappointed.

[N1SB]

The most powerful move in Warhammer is to cross over to your opponent's side of the table and see from his point of view.

 

It is in the spirit of taking you to the opponent's edge that I share how stock traders and the media that covers them think.

 

As of this writing I've not yet found the Dragoneye report.  I'll go see if any of my old network has 1; it's like if you have Warhammer+, you can just invite a friend over to come watch with no extra cost to you, it's like that.  These are literally called "brokers' circulars" colloquially because they circulate amongst us.

 

 

Players That Never Played A Game

 

Most stock traders, investment bankers, equity guys, etc., are like 40k fans that've never played a game.

 

That's different than if you're not currently playing; I haven't yet played 11th ed myself.  But the market is this abstraction of the economy, in the same way that 40k is an abstraction of war, played by analysts who studied every YouTube tactics video, saw all the MEQ (Marine Equivalent kill ratio) charts, but don't know what securing an objective feels like.

 

The analogy I would make might be slightly outdated, but it's an All-Eradicator Army.  In previous editions, Eradicators (Melta Marines) were rated as Top Tier because of how well it kills, very high MEQ ratio.  A new player who only knew YouTube tactics videos would see all these Tier Lists with Eradicator at the top.  He would go to the store with this in mind, and we would advise him he needs some cheaper Intercessors/Troops to cap objectives or simply Transports to bring his short-ranged Eradicators to bear.  Those obvious things, he would not simply "get" beforehand.  But...but...the MEQ ratio...

 

That's what equity guys are like and there IS a flaw in this analogy; at least the YouTube tactica are made by players, equity guys read "brokers' circulars", these cheat sheet/cliff notes reports written by OTHER people who ALSO never played the game.  During my time, they were basically fancy book reports at a MBA level.

 

These days, they don't even look like a MBA-level book report, but a marketing brochure trying to push a company's stock.

 

Now that you understand how they think, let's see how they work, to see how they collectively affect share price.

 

 

Not Buy & Sell, But Entry & Exit

 

Sir Terry Pratchett (of Discworld fame) wrote, "A bad hunter chases.  A good hunter waits."

 

You guys get this, but when I explain to young guys, I have to tell them the stock market is not what they see in media.  It's not a bunch of guys that run around shouting, "Buy!  Sell!  Buy!  Sell!"  In fact, if you look at the famous stock exchanges, the trading floors have a few computer kiosks and no people.

 

It's because it's all automated.  Investment organisations set an Entry Point and an Exit Point.  An Entry Point is like waiting for Games Workshop stock price, which was too high, to fall below a certain price, to automatically buy.  An Exit Point is if that stock went to a high price to sell at a profit, or too low, so just divest.

 

Sometimes people ask me when AI will take over the stock market, I tell them 30 years...in the past.  Everything was automated in the '90s.

 

In Warhammer terms, it's like deciding how many points a unit is worth to you BEFORE a Balance Dataslate comes out.  Like if a unit of 3 Eradicators fall below 80 points, then I'll Buy more or expand my squad to 6.  If it gets a points hike to 110, I might as well replace them with a Vindicator.  A few points up or down, I'll hold.

 

I'm told professional gamblers have a similar system.  They decide in advance, to avoid getting swept up by emotion.

 

UNLESS there's some accounting discrepancy found, this Dragoneye report that caused a sell-off should not have much effect.  Edit - You see the idea here?  We'd have used historic financial data to model our own forecasts.  Unless Dragoneye found the numbers that GW itself put out are wrong, I wouldn't change my model.

 

So it's NOT Buy & Sell, BUT Entry & Exit, then...Wait & See.  The question is the calculation, the equation they use, what goes in it?

 

 

Price/Earning Ratio & Growth Rate & Adjustments

 

This is SO NOT Econ 101, nor is it a platitude like "corporations maximise profit," it's more like "Two Thin Coats"...which I know is outdated.

 

The purpose of buying a company stock is not like collecting a rare comic book or, heaven forbid, some meme coin.  A company's stock pays YOU money regularly.  It makes profit, you share in that, based on how much of it you own.  But a company can grow over time, and there are outside factors that might affect it, so:

 

• You have a Stock Price over Earnings Ratio, like 20.  You buy it today, it pays you yearly, in 20 years you make it back.  Calculated.
• Compound Annual Growth Rate, like a company regularly grows, in 30 years they'll be double the size, or whatever.  Forecasted.
• Then you can make "adjustments".  How well do you think a future Amazon series will grow GW miniature sales?  Subjective.

 

These ratios are like MEQ, meaning you'll never see the official 40k rules say "a Marine Equivalent Ratio", it's just a shorthand we use we all get.

 

So you can imagine somewhere there is a spreadsheet ALREADY made, they just plug in new numbers whenever GW releases financial figures in much the same way we wait for a Balance Update comes out.  Here's the clincher...they're all written in a way that sees only 1-year or 3-month cycles, which means...

 

 

"Year-On-Year"

 

You'll hear this a lot, "Year-On-Year."  Everything is based on this year compared to last year to predict next year.

 

(If anything, it's even shorter now.  The holding period of a stock used to be a year, now it's mere months.)

 

When you have something that is multi-year, the stock market is very bad at it.  It undervalues or overvalues.

 

Example: Electronic Artists, then Electronic Arts, now just EA, the video game publisher.  It's where game studios go to die, but why?  Most video games take years to develop.  EA, however, got used to EA Sports: NBA, Madden, etc., just every year they churn out a game worse than the last.  So every game studio EA acquires is called up in a meeting, why haven't you put out a game this year?  Look at the Madden team, they kicked a game out the door!  What's wrong with you?  Your studio is closed down.  EA now no longer sells games in the same way you don't buy movie DVDs anymore, they sell EA play subscription of games like Netflix...it's much more fitting to how the stock market sees things.

 

On the other hand, with something like AI companies now (dot-coms back then), they overbet, it's too big for them to conceive.

 

I don't know the exact history, but it's basically all financial institutions are based on this tradition of calendar years or something.

 

Congratulations, you made it through the hard part, let's go straight to how it applies to GW, get this over with...because it'll seem very familiar.

 

 

How It Applies to GW

 

 

I've mentioned this before, but to review, "New GW" post-2016/2017 had this "bunny hop" in revenue and profits.

 

(I previously showed this graph to my Warhammer Store WhatsApp, they're just like us.  The Warhammer Store manager used the term "stone steps" in Cantonese, because after around 2016/2017, they kinda look like it.  But it's also a comment on his hard work, he's always having to climb higher and higher stairs.)

 

It generally goes like this, a 3-year cycle, like if GW was a world, it'd have 3 seasons:

 

• A 40k year of rapid growth, that's their Spring
• An AoS year of moderate growth, that's their Summer into Autumn
• A gap year now filled by 30k, that's their Winter, everything plateaus

 

It's hard to think of being on a weird planet where there's 3 seasons that stretch over 3 years, isn't it?  Exactly my Year-On-Year point above.

 

I mentioned before, I can't find the post, the best time to buy GW stock is after 30k results before 40k results, it's exactly this reasoning.

 

The worst part is that these recent seasons, there was this crazy El Nino effect, went something like this:

 

• A 40k year of rapid growth, the Spring, that was normal
• The AoS year also had Space Marine II licensing, HUGE impact on profit, a 2nd Spring
• A typical 30k year, the Winter...but it feels especially harsh 2 Springs in a row

 

Now go back to how these 40k fans that have never played a game, who only see the world in 1-year windows.  They overhyped the last 2 years, assuming EVERY YEAR you get a new 40k edition, EVERY YEAR you get a Space Marine III, Space Marine IV, Space Marine V, etc...or Space Marine Equivalent.

 

So in a This Year vs. Last Year tunnel vision of the world, the lack of a new Space Marine video game license revenue...they want their Space Marine Equivalent.

 

 

GW DOES Have Limitations

 

And what is GW's real problem(s) now?  Re-using the system I mentioned earlier:

 

• Stock Price over Earnings Ratio: Earnings don't have another Space Marine II game to fill in last year's massive success
• Compound Annual Growth Rate: 30k was a slow growth year, lots of growth was a one-off from Space Marine II bump

 

Those One-Offs are a legitimate limitation.  Space Marine II doesn't have an immediate sequel this year because it takes time, and I think we did have a bump of new tabletop players from Space Marine II.  It's unlikely there will be a similar bump until another major event, like people seeing 40k in an Amazon show, etc.  Then...

 

• Some adjustment from an external factor, and it is JUST as when I 1st joined B&C, Marshal Rohr helped me:

 

14 hours ago, Marshal Rohr said:

Don’t forget the oil shock

 

It don't know what's sadder, that as a child I didn't understand why people went to war over oil, or that as an adult now I do.

 

Any financial organisation, from investment to insurance, would make an adjustment.  I'd've had a colleague in the Energy Office come down to me maybe and tell me something like "there's an explosion in the Middle East, adjust anything to do with petrol, shipping AND PLASTICS 10% down for now."

 

You see what's happening in the world.  I've been talking about this forever.  Miniatures are plastic, a petroleum byproduct, that needs lots of energy to melt down and the furnace never shuts down.  GW's plastics are especially high quality, harder, thus takes even more energy.  I'd have cranked up the adjustment myself.

 

What should GW be priced at?  I'm not one to say, but let me give you a frame of reference below.

 

 

GW Now Priced Like Google, Not nVidia

 

Disclaimer: I'm not giving investment advice, you should always talk to someone serious, like a doctor diagnosing a patient.

 

But I just want to show you some Price/Earning Ratios, because it's like seeing points values for the 1st time, to compare with:

 

• P/E ratio of ~10: old, reliable industries, like Toyota or Honda
• P/E ratio of ~20: growing companies, like Alphabet/Google
• P/E ratio of ~30: nVidia, what we used for our graphics card, now taking over the world via AI
• P/E ratio of ~40: Apple, overpriced, this used to be how dot-coms were valued, too high
• P/E ratio of ~60: Tesla, so overpriced it's a meme, you buy this stock for political reasons

 

GW went from a P/E ratio of 30+, where nVidia is now, to only 20+, above Google.  Yes, GW's so bad now, it's a Google.

 

How many UK companies hope to be comparable to Google right now?  But let's have a real look at GW's share price:

 

 

This Dragoneye report that wiped out £480 million, like GW's worst day in the history of forever.  Well, what happened on June 26, almost 4 months ago?  That's a much bigger drop.  This was just a quick Google search, that looks a LOT more precipitous than the last few days.  Why was no one talking about that then?

 

My gut instinct when I 1st saw this is like those YouTube videos that said Gorkamorka bankrupted GW, when we all know now it was GW's expansion following the success of LotR AND the Eye of Terror campaign that reached a peak around 2004, that lead to an expansion they could not pay upkeep costs on.

 

This is really weird...sometimes I feel like I'm going crazy or the world has.  You see what I see, right?  This isn't even the biggest drop.

 

 

Not Just the Market, But the Media

 

To be clear, it was The Times that published the story, but an older FT Blog post highlighted the real issue here:

 

 

It's not so much about GW as it is how GW doesn't try to court media.  The media, used to being wooed...well, you can read between the lines.

 

GW isn't suppressing journalism (in fact, "FTAV didn't bother contacting them for this piece," why not, isn't that your job?)  GW publishes all relevant information...even more than I'd expect...publicly.  I share it with you guys as a way of thanks for all the things you taught me.  Have you noticed no press goes into that level of detail?

 

Whatever the Dragoneye report says, this "quirk" of not GW, but the media who expects GW to fete them WILL affect their reporting.

 

 

I Want To Read This Dragoneye Report

 

Disclaimer: I actually have a professional connection to Dragoneye Research, like finding we're distant cousins.  I'm as shocked as you.

 

They may have more data, either actual or inferred by looking at 3rd party resellers, for example.  They can do stuff like that, it's good.

 

The ONE thing that surprised me was how there was this sudden growth in the Trade i.e. FLGS channel, with the GW CFO citing Asia, when I know their Hong Kong colleague was let go from his job.  I described that then as like receiving a phone call from a dead man.  If there's some accounting discrepancy, it'd be there.

 

However, the problems that Dragoneye supposedly cited, like how GW cannot sustain its licensing revenue every year, is EXACTLY what GW itself said:

 

 

The worst part is, as you saw, GW's share price came down since late June, which is when investors wouldn't gotten an Annual General Meeting, so GW disclosed everything to them 1st; that is normal.  This might all be a hit piece using this confidential report no one can see as an excuse, a dodgy dossier, but why?

 

Edit - to be clear, I don't think Dragoneye Research putting out a paper is wrong, nor do I even question their alleged findings, because GW and I have said the same things.  The spin The Times seem to be giving it might just be sensationalism, an editor altering a journalist's reporting with a shoddy headline, but it's odd.

 

 

Conclusions & Takeaways

 

Congratulations, in 1 post, I honestly condensed like a short MBA module on how the stock markets work:

 

• It's not "Buy!  Sell!  Buy!  Sell!"  It's Entry Point & Exit Point
• Price/Earning Ratio and Compound Annual Growth Rate, with adjustments, is all you really need
• GW's 3-year business cycle does not fit the 1-year tunnel vision investors are used to
• GW's doing so bad it's no longer priced like nVidia but Google, isn't that terrible
• I honestly think this non-crisis is a bit of a media creation, but I don't know why this

 

Until I saw the actual stock chart, I thought this was a real story.  I'm keen to learn if Dragoneye found something we didn't, will let you know if there is.

 

Edit - to sum up, GW share price was going to go down after the financial report, when investors finally realised there was no Space Marine III this year.  This Dragoneye Research team recently released a report, which the Times drummed up like the cause of a share price rebalancing that was ALREADY happening.

Edited October 13 by N1SB