On the Day of Record Highs in the Stock Market... NC Alone Feels 'Embarrassed'

[Asia Economy Reporter Koh Hyung-kwang] The stock price of NCSoft, which was on the verge of reaching 1 million KRW per share, remains stuck in a trading range and is struggling to gain momentum. This is interpreted as being due to concentrated selling by foreign investors, acting as a downward factor for the stock price.

According to the Korea Exchange on the 24th, NCSoft closed at 822,000 KRW on the KOSPI market, down 0.7% from the previous trading day. After holding steady on the 20th, the stock price declined again on this day. The previous day, the KOSPI index surpassed the 2,600 mark, setting an all-time high supported by large-scale buying from foreign investors, with a notable upward trend across sectors. However, NCSoft was the only company among the top 1 to 20 by market capitalization on the KOSPI to close lower.

Recently, NCSoft’s stock price has been trapped in a box range. After hitting a low of 530,000 KRW in March amid the significant market volatility caused by the COVID-19 pandemic, the stock began to rise as it attracted attention as a non-face-to-face (untact) related stock. About three months after the yearly low, in mid-June, it touched 900,000 KRW, and a month later in July, it rose to 997,000 KRW, nearly reaching 1 million KRW per share. However, the upward momentum weakened afterward, and the stock price has remained between 700,000 and 800,000 KRW for the past four months.

The main reason NCSoft is struggling is that it has fallen out of favor with foreign investors. Over the past four months, foreign investors have sold more than 410 billion KRW worth of NCSoft shares, hampering the stock’s rise. This contrasts with the period after the March low, when they bought over 200 billion KRW worth of shares until June, when the price rapidly climbed to 900,000 KRW. In the past month alone, net selling reached 100 billion KRW.

This is analyzed to reflect the slowdown in revenue from existing mobile games and delays in the release of new games. The average daily revenue of Lineage 2M decreased by about 20%, from 2.2 billion KRW in Q2 this year to 1.8 billion KRW in Q3. Lee Moon-jong, a senior researcher at Shinhan Financial Investment, said, "NCSoft’s stock price continues to decline as Lineage 2M’s revenue has decreased and the anticipated releases of Lineage 2M in Taiwan and the new game Blade & Soul 2 within this year have become uncertain." He added, "In the recent earnings announcement, we expected specific schedules such as pre-registration dates or release months for the new games, but only the first quarter of next year was mentioned, which raises concerns about further delays."

However, there are opinions that if the new game releases become visible, expectations for revenue growth could lead to a rebound in the stock price. Kim Min-jung, a researcher at Hi Investment & Securities, said, "Considering that Netmarble’s 'Blade & Soul Revolution' recorded initial daily sales of over 1 billion KRW and 600 million KRW in Q3, we can assume an average daily revenue of 1 billion KRW for 'Blade & Soul 2' next year." She forecasted, "Once pre-registration for Blade & Soul 2 begins, the stock price’s upward trend will likely start in earnest."