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FC Stock - actual facts
bcrfan
Member Posts: 10
me good at number, one, two, three... me know big thing about market, me guru of wall st.
after much hatred from people here and out of curiosity i looked at the companys finc. statements to see what all the hoopla is about. and these ARE THE FACTS.
the company has ample liquid assests in the form of cash equivalents (this is good thing, i.e. money)
the company's revolving debt (attributed to creation and sale of physical product) to is more or less on par with its short term accts receivables (attributed to things such as subs, and box sales) - (these should be equal, with FC it is for the most part, this is a good thing)
the company' debt equity (D/E) ratio, is 0.2 ballparking it without a calculator, this is VERY conservative, most companies run around a D/E of 3, meaning should they need to they can borrow cash in a heartbeat.
their cash flows are at 1.2x those of 2007 at 1/2 year end, with the company investing the cash heavily - all good things considering as the company is looking to expand and grow (my 1st thought, its difficult to tell with such consolidated finc. statements)
What I - as someone who actually knows what he's talking about - would keep an eye on is future free cash flows. furthermore, the repost presented by FC, is not in the least bit a full financial report it's simply Q2 YTD (year to date) earnings, and if they manage to meet their expected revenues in Q3 and Q4, the game WILL be a sucess. - given you'd need to do a project irr, and npv analyses, for truly accurate results but the info just isnt there and companies dont disclose that sort of thing. and finally the company has a positive return on equity of 4.55 - no idea what the average in their industry is so I can adequately compare.
NOW - as for all you hairless simians, pointing to the stock price falling. it has historically floated in the 20's based on their earnings expectations, with average volume being - again - i'm eyeballing the figure, about 60-100k shares traded daily since the company went public. I'm exlcuding form this number large institutional investors (your i-banks - sorry - investment banks, you know like Merrill Lynchs, JP Morgans) as they tend to throw numbers off a bit. meaning not a hotly traded company in the least bit - meaning, higher trading volumes can adversly affect the stock price of the company, esp. when larger scale investors are concerned
as the trend in companies seems to be, the stock begins balooning prior to product launch, and then falls flat to the levels it was prior to launch or lower for any product, especially in companies that are not diversified. This is often seen in post IPO (initial public offering) performance of literally 90%+ of companies, the one who managed to bypass this was amazingly Google.
Now, circa the launch of this game - volumes have surged sometimes to 4.000.000+ shares traded on very specific dates, this leads me to believe that institutional investors are betting on margins, and moving the market. a famous case is when Soros destabilized the british pound. with FC, this is to a much smaller scale, but it's blatantly evident when looking at the trading volume.any large i bank can play with a company with a market cap of
The only thing I would do as funcom, is perhaps leverage myself a bit more (take on more debt) and invest tha into the current projects that I'm working on based on my future cash flow expectations from this and other products.
as for the stock, i would follow it, and wait until sales volumes drop off to their pre-AoC levels, or there about, and buy the stock when if and when it reaches below 18ish, i wouldn't say hold or sell at the moment as i have no idea of what the insitiutional investors want to do. but it will be hover at around the 20's - and even at this price the P/E (price to earnings ratio) is still ridiculously high - though I dont know the industry average, it could be perfectly normal - but if it is high, THIS MEANS, that the natural value of the stock should be less, meaning, that because it is so high, INVESTORS believe in the company.
finally as for cash flows - they are based of subscriptions, and while they may be falling in the US, having stable growth rate in the EU, and launching in Poland, Russia soon, and followed by Asia. their market WILL expand, this is a 100% given, and with an expanded market, you have more customers, and more customers, long term, or short term mean revenues, that relate to income, and the bottom line.
as for me, I used to work in investment banking in both New York and London, and decided to quit and have a much more relaxing life as a playwright. Be well , facts are facts, if you have intelligent constructive, comments to make please do so, and not, OMG SUBCRIPTIONS FALLING, FAILCOM DID THIS ON PURPOSE TO MAKE MY AND EVERYONE ELSES LIFE HORRID!!!!!! I QUITTED A YEAR AGO!!!
Tootles,
and just in case anyone is wondering, I play eve. 
Comments
Now now no need to be petulant and insult people ..you clever everyone else dumb ...well done...noddy badge for u
Okay I'm not going to question your financial skills and ability to read the status of Funcoms shares and what it means ...thats actually irrelevant to the point most are making .I work for a global IT company that lost 80% of it;s share price in the 2000 crash of IT companies .We are a multi-million dollar company that makes consistent profit every year and the share price has stayed low ...but we are good at our services and customer support .
The point you seem to have missed ,which is surprising due to your superior intellect ,is what is the impact for Funcom in the future .There reputation is in tatters and there is much animosity towards them .The majority of gamers dont believe them or want to support them anymore .Over the next 6 months we will see how many subscribers remain.Will Funcom remain open,,,yes I'm sure they .There are MMO games out there that are supported by 20 k users .Will they be the powerhouse they are now ..no .They will stay open a former shell of there once successful 700 k user base.I want them to suffer and learn the errors of there ways ..The falling share price is merely a symptomatic result of there incompetency at the way they released and managed AOC .And it makes me happy cause it shows us the lack of confidence people have is the company .
Thats all the falling stock means to me
"after the time of dice came the day of mice "
Well you do know that people/gamers were "Funcomd" back in 2001 by Anarchy Online,
you do know that they borrowed even more money and AO is still considered one of the worse releases ever, you do know that Anarchy Online is still up and kicking
you do know that before age of conan release there was a lot of talk about how bad Anarchy Online release was
you do know there was bunch and bunch of NDA breaks about game state
Well draw conclusions by yourself.
Futilez[Do You Have What It Takes ?]
Well you do know that people/gamers were "Funcomd" back in 2001 by Anarchy Online,
you do know that they borrowed even more money and AO is still considered one of the worse releases ever, you do know that Anarchy Online is still up and kicking
you do know that before age of conan release there was a lot of talk about how bad Anarchy Online release was
you do know there was bunch and bunch of NDA breaks about game state
Well draw conclusions by yourself.
I agree with you ..I dont think Funcom will go under ..AOC will continue .But this debacle of AOC will have consequences for them the impact AOC was suppose to have on the gaming world
"after the time of dice came the day of mice "
I'm glad someone knows what he is talking and not pulling things out of his a$$
The OP proves the point that there are a lot of bad investors out there.
Buy if it ever falls below 18? Guess what, it was already below 18 when you wrote this. In fact, it's already down around 13. Way to try to catch a falling knife!
The high P/E is a good thing, because it shows investor confidence? Ummm... it did show investor (over) confidence as many seem to have been playing this stock like a lottery ticket, hoping AoC might be the next WoW. Investor confidence is now gone, which is why the stock will continue to drop until the price is more in line with the metrics.
There will be no miraculous turn around for the game. Funcom's failure is so complete that any appeal for speculators is gone. No potential pot of gold at the end of this rainbow. So, what is an overpriced, mismanaged complete failure of a game company actually worth?
Find the price at which Funcom would be an attractive take over target and you might find a solid bottom. Hint: that's a good bit below it's current price of $13.60
Want to know more about GW2 and why there is so much buzz? Start here: Guild Wars 2 Mass Info for the Uninitiated
The OP proves the point that people can be easily trolled.
You do realise that we are in a very different ecconomic enviroment with the US banks frankly almost destroying the banking system.
Banks are refusing to lend to one another now let alone to companies, unless Funcom can show an unbeliveable business plan to a bank, I cannot see how they are going to be able to borrow yet more money as they gross turnover is frankly tiny.
In fact doers anybody know Funcoms Lender rating? Becuase I don't think it's cureently AAA+ or anything near that to obtain real money.
I'm glad someone knows what he is talking and not pulling things out of his a$$
There is absolutely no indication of subscription growth in the EU. I'm not even sure you can show that EU is losing subscribers at a slower rate than the U.S.
Before counting on additional regions for profit, look at the 2nd quarter results. They lost a lot of money on the launch. We don't even know if they will be able to maintain enough subscription revenue to turn a profit in Q3 and Q4 with out significant cost cutting measures.
Launching into new regions may almost certainly eliminate any potential for an overall profit during that quarter, with no assurance that the cost will ever translate into profit down the line.
It seems as if expansion into new markets may just be another Funcom smoke screen. Play up potential upside that isn't there and hide quarterly losses behind "one time expenses related to expansion into a new market".
Contrary to what many may believe, all those AoC box sales did not result in a profit. Funcom LOST millions of dollars because launch and infrastructure costs soared way beyond box sale revenues.
What are the on going costs? We just don't know, which is a big reason to stay away from this stock, rather than trying to "catch the falling knife", hoping for some miraculous turn around.
Want to know more about GW2 and why there is so much buzz? Start here: Guild Wars 2 Mass Info for the Uninitiated
You know if anyone wants I will absolutely tear this BCR guy a new strip...that is the worst analysis i've ever seen from someone claiming to be an expert.
But Funcom falling to an all-time low today makes it hard for me to snap out of my jovial mood.
Lit
Funcom's hope is to bait more suckers in more regions plain and simple. The problem though most them know that. So how do I say in Russian "this game is a scam" for our russian friends lurking these boards.
I'm glad someone knows what he is talking and not pulling things out of his a$$
There is absolutely no indication of subscription growth in the EU. I'm not even sure you can show that EU is losing subscribers at a slower rate than the U.S.
Before counting on additional regions for profit, look at the 2nd quarter results. They lost a lot of money on the launch. We don't even know if they will be able to maintain enough subscription revenue to turn a profit in Q3 and Q4 with out significant cost cutting measures.
Launching into new regions may almost certainly eliminate any potential for an overall profit during that quarter, with no assurance that the cost will ever translate into profit down the line.
It seems as if expansion into new markets may just be another Funcom smoke screen. Play up potential upside that isn't there and hide quarterly losses behind "one time expenses related to expansion into a new market".
Contrary to what many may believe, all those AoC box sales did not result in a profit. Funcom LOST millions of dollars because launch and infrastructure costs soared way beyond box sale revenues.
What are the on going costs? We just don't know, which is a big reason to stay away from this stock, rather than trying to "catch the falling knife", hoping for some miraculous turn around.
I was being sarcastic btw... This post is a copy paste from mmorpg.com/discussion2.cfm/post/2228714#2228714
I think the Russian market is hugely untapped. After all, with median yearly wages of ~$6000 US a year...everyone will have disposable income to pay for AoC right? Especially with its low hardware requirements?
Lol!
Lit
As a sound investor you must know that even a company with strong fundamentals will have low stock prices if there is no investor confidence. And Funcom has destroyed investor confidence and their us revenue stream. Right now the US is one of the largest markets for mmos out there with China and Korea being a huge market as well. The game wont appeal to asian players so they can expect a very niche market in asia. As for Russia and Poland I doubt russian and polish players are any dumber then us ones are.
Even with low debt and good standing cash they have severely hurt their revenue stream for the next year at least and they arent going to win back investor confidence easily in todays economic climate. They may not go belly up but their stock price isnt rising any time soon. I doubt the CEO would have sold off 100k shares if he thought it was.
How can anyone put a positive spin on 15 consecutive quarters with negative earnings?
And to add to this solid post:
A solid foundation is a necessity for stock appreciation...not a bonus. Companies without solid fundamentals in terms of debt and cash flow at this stage in their development are extremely likely to lag. Funcom's fundamentals allowed investors to look at the next necessary component for company growth: future earnings.
They can forgive debt.
They can forgive high operating expenses.
They can forgive operating losses.
What they can't forgive is an absolute implosion of revenue streams.
Simply put: Funcom needs to hit 17 million+ in revenue in Q3. It is not going to do so. And then at that point you will see true stock attrition.
Lit
there is none. I wouldnt be surprised to hear their next mmo is caned and they file for bankruptncy in the next 6 months. Even if they hold onto this pipe dream of making secret world or whatever the hell their next fiasco is I doubt a publisher will take it at this point. AO and AoC they have a pretty bad track record for mmos.
Many prospective juniors, retail, and service corporations can build a successful market story despite operating losses if revenue streams continue to increase and future earnings look bright.
Funcom is now failing in both aspects. Their last "mediocre" quarter will be Q3 (because they have subscription revenue from July to rely on) but after that things are going to get ugly.
Not that they aren't now! It will just get significantly worse.
Lit
And to add to this solid post:
A solid foundation is a necessity for stock appreciation...not a bonus. Companies without solid fundamentals in terms of debt and cash flow at this stage in their development are extremely likely to lag. Funcom's fundamentals allowed investors to look at the next necessary component for company growth: future earnings.
They can forgive debt.
They can forgive high operating expenses.
They can forgive operating losses.
What they can't forgive is an absolute implosion of revenue streams.
Simply put: Funcom needs to hit 17 million+ in revenue in Q3. It is not going to do so. And then at that point you will see true stock attrition.
Lit
Exactly investors are only going to invest in high risk stocks if theres a potential revenue stream to offset the risk. Since Funcom has ruined that revenue stream this stock is going to tumble further. I have no idea how low this could go. Atari dropped to .75 cents a share a few years ago and that was WITH a string of high profile licenses like the Matrix, Dragonball and Dungeons and Dragons. Their operating loss over the last 15 quarters makes them a high risk stock.
Whle I thoroughly enjoyed reading a fluently-written and well-informed, if perhaps misguided, post for a change, I suspect that for all the formulae being invoked there is a simpler story going on here -
WoW proved there was a huge market for this kind of stuff. (MMOs)
We suspect the market will grow as intenet connectivity continues to rise, and most noteably with huge gains in the developing world.
The general bet is this: we will see another bigger better WoW sooner or later, and at the very least we will see a bunch of games that match WoW's numbers. So there is a shit tonne of money to be made.
The customer base is growing - and in some parts of the world exponentially. This is an industry on the up.
But then again, so is biotech, and pharma, and energy and yada yada... and there are many companies which fail even in a growing market. And MMOs are new tech and difficult to make well. And they require an unprecendented degree of customer service.
So risk remains. The way I see it, when the underlying market is growing - and when, as in MMOs, despite all the mounting evidence, it hasn't become blindingly obvious to the whole world that the market is going to grow - people think that it's worthwhile taking a few leaps of faith on companies that seem to talk the talk, because one of them will result in a windfall, despite a fair possibility they will fail.
There was plenty to suggest that Funcom might have been a winner in this market. This was not its first MMO - which would suggest it has the capacity to learn and expand and deal with challenges. The game itself looked pretty nice, and was getting good reviews. Overall, sounded enouraging.
But the MMO market is fickle, and loves internet forums. It talks to itself across frontiers and is moody. And guess what, Funcom missed something VERY important - that PVP is more important than PVE in creating a lasting game. Who knows why they missed it, because shifting taste aside ITS OBVIOUS! Humans provide more content than programming AI bots evr will. So a good bit of PVP gets you so much more bang for the buck in terms of subscruptions retained/coding required.
Funcom realised this too late and are struggling to react. In so doing something has gone wrong, some underlying faults in the code or whatever (I am no programmer) are revealed, their customer service standards start swinging like a flag in a hurricane, it turns out they did not sufficiently address security issues (this is hard stuff, not their fault, but they weren't up to it) and all of a sudden the potential next big thing turns out to be a big mess.
So, all the reasons to bet on Funcom as a fair possibility of the next big thing in an expanding market beging to go poof! And so the stock tumbles. But guess what. It is an expanding market, and this game will improve, and an equilibrium will be reached. Just not nearly as high as people originally hoped.
Which all amounts to, Mr OP, that this is a specific market and applying generalisations from other industries will only get you so far. The reality is, MMOs are a market with a particular set of characteristics. And people are only just beginning to get a sense of what the applicable benchmarks are.
Fun times!
And to add to this solid post:
A solid foundation is a necessity for stock appreciation...not a bonus. Companies without solid fundamentals in terms of debt and cash flow at this stage in their development are extremely likely to lag. Funcom's fundamentals allowed investors to look at the next necessary component for company growth: future earnings.
They can forgive debt.
They can forgive high operating expenses.
They can forgive operating losses.
What they can't forgive is an absolute implosion of revenue streams.
Simply put: Funcom needs to hit 17 million+ in revenue in Q3. It is not going to do so. And then at that point you will see true stock attrition.
Lit
Exactly investors are only going to invest in high risk stocks if theres a potential revenue stream to offset the risk. Since Funcom has ruined that revenue stream this stock is going to tumble further. I have no idea how low this could go. Atari dropped to .75 cents a share a few years ago and that was WITH a string of high profile licenses like the Matrix, Dragonball and Dungeons and Dragons. Their operating loss over the last 15 quarters makes them a high risk stock.
I made a call that Funcom would drop to ~7.50 NOK by Feb. 15th (back when it was in the mid-20s). That translates to $1.50 US a share. It seems about right.
I would actually consider picking up Funcom stock at around ~5-6 NOK...with 30% of my shorting profits. They have some potential worth investing in if the situation is right (drastically lowered operating expenses, improvement and use of the AoC license, etc etc.)
Lit
And to add to this solid post:
A solid foundation is a necessity for stock appreciation...not a bonus. Companies without solid fundamentals in terms of debt and cash flow at this stage in their development are extremely likely to lag. Funcom's fundamentals allowed investors to look at the next necessary component for company growth: future earnings.
They can forgive debt.
They can forgive high operating expenses.
They can forgive operating losses.
What they can't forgive is an absolute implosion of revenue streams.
Simply put: Funcom needs to hit 17 million+ in revenue in Q3. It is not going to do so. And then at that point you will see true stock attrition.
Lit
Exactly investors are only going to invest in high risk stocks if theres a potential revenue stream to offset the risk. Since Funcom has ruined that revenue stream this stock is going to tumble further. I have no idea how low this could go. Atari dropped to .75 cents a share a few years ago and that was WITH a string of high profile licenses like the Matrix, Dragonball and Dungeons and Dragons. Their operating loss over the last 15 quarters makes them a high risk stock.
I made a call that Funcom would drop to ~7.50 NOK by Feb. 15th (back when it was in the mid-20s). That translates to $1.50 US a share. It seems about right.
I would actually consider picking up Funcom stock at around ~5-6 NOK...with 30% of my shorting profits. They have some potential worth investing in if the situation is right (drastically lowered operating expenses, improvement and use of the AoC license, etc etc.)
Lit
I would only consider it if the market value was lower then their eps. I just dont trust them to turn a profit anytime soon and I am a value investor. I bought up stock in them to ride the hype wave and dumped it about a month after launch when it was clear the game had serious problems. For the most part i dont invest in companies that are one trick ponies. I prefer value investing.
Marky, I'm afraid you're sadly mistaken if you believe this.
Funcom stock dropping to an all time low today and the CFO quiting and selling all his stock in the company certainly made my day.
I can only hope tomorrow is even better
To the OP:
I am sure there are more than a few of us who have finance majors so I won't pretend that everyone else but myself isn't informed enough to understand the following. Allow me to shoot holes in your "theories"...
1.) What evidence have you that indicates that subscribers are going up in Europe? Unless you can provide some sort of official claim then that is just a flat out lie. If anything, their subscriptions should be falling pretty much on similar levels. They are NOT gaining subs in Europe, they are losing subs everywhere.
2.) Funcom can easily borrow money? From who? Would YOU lend Funcom millions of dollars from your reserves? The CEO dumps a large portion of his stocks, the Financial Controller dumps ALL his stocks and leaves the company. The stock value quickly declining. I am guessing it would be quite difficult for Funcom to get a reasonable loan right now, unless it was in the form of a takeover.
3.) Poland and Russia are going to save AoC? Did you forget to include operating costs of startup in both countries? Did you forget the added GM support or the fact that they likely will not retain those subscriptions with the game in the shape it is? All I see from Russia or Poland is some quick revenue with some quick expense, and more lost subs because the product isn't ready for launch.
I know it's easy to google an expense statement, come on here and type out a long post essentially calling everyone on this forum a moron, but 99% of business is common sense. Common sense tells us that unless AoC is DRASTICALLY improved in the near future that it may in fact have very little future, and Funcom right now is in serious trouble. I would not be surprised at all if someone were to buy up a great deal of stock and negotiate a controlling interest to get their hands on AO and AoC. A proper development team could make AoC 1-80 like Tortage and make some money off of it.
Tecmo Bowl.
Funcom is fundamentally weak with little hope of maintaining subscriptions for their game Age of Conan. The main concerns stem from the companies inability to focus on both development and customer
care.
Age of Conan sprinted out of the gates on launch but has since been limping towards an the MMO graveyard. Customers have addressed deep concerns over the lack of game content and poor customer service. The majority of servers have seen drastic population drops as subscription
cancellations escalate.
The biggest news coming out of the game in weeks was a virtual sex scandal involving a Funcom employee. This bad press has lead to some extremely upset investors. The story has solidified concerns over Funcoms lackluster approach to customer care.
Forecast:
- Look for subscriptions to drop below 250,000 in September as Warhammer Online launches and World of Warcraft ramps up marketing for their upcoming expansion.
- As the subscriptions fall off, the stock falls off. Will we see a dip below ten dollars?
- Sell now to be safe.