The current share price reflects very low market expectations, and with reduced short-term financial risks, we believe this presents a potential contrarian opportunity for risk-tolerant investors.

Starbreeze’s Q4 revenues and adjusted EBIT largely aligned with our expectations, with revenue coming in slightly higher, though this was solely due to earlier-than-expected contributions from the KRAFTON partnership.

We expect Q4 revenue to remain at a low level with somewhat challenging year-on-year comparisons due to the timing of the PD3 launch. We also expect continued cash flow pressures in the quarter due to negative earnings and high investment levels.

Starbreeze announced yesterday a work-for-hire agreement with KRAFTON Inc, the South Korean gaming giant behind the global hit PUBG: Battlegrounds. We view this agreement as a good strategic fit as Starbreeze takes no financial risks, retains full ownership of the PAYDAY IP, and gains increased visibility and reach by introducing the PAYDAY gameplay experience to one of the world’s most popular games.