The Defense Crumbles: Pearl Abyss Stock Falls Another 21%

One of the benefits of owning an independent blog is the ability to go back and update stories I find interesting. The fall of the stock price of Pearl Abyss following the managerial buyout of CCP Games/Fenris Creations is one of those stories. When I last looked on 22 May Pearl Abyss stock had fallen to ₩46,050, the target price set by the analysts at JPMorgan. How has the price moved since then?

The price continued to slide

The price continued to fall. By the close of the KOSDAQ on Friday 5 June the stock had dropped another 12% down to ₩40,500 a share. On the following Monday the price crashed through ₩40,000 a share in afterhours trading over the weekend to open at ₩37,700. On Tuesday Pearl Abyss announced three measures designed to stabilize the stock price.

The first was the establishment of the company's first-ever annual cash dividend policy (the greater of ₩10 billion ($6.5 million) or 10% of net profit). 

Next came the retirement of roughly 1.4 million treasury shares (representing 50% of its holdings) three days later on Friday, June 12. When a company "retires" treasury shares, it permanently deletes them. These shares vanish from the books and Pearl Abyss can never reissue or resell them on the open market. By permanently shrinking the total pool of outstanding stock, Pearl Abyss structurally locked in a higher ownership percentage for every remaining shareholder and theoretically eliminated future dilution risk.

The third measure reinforced the retirement of the treasury shares. The company hired Korea Investment & Securities Co., Ltd to institute a buyback of ₩100 billion ($64.7 million) worth of Pearl Abyss shares. The buyback program is scheduled to last until December 2026.

At first the buyback worked as intended by creating a psychological price floor. The buyback news triggered a short-term rally, lifting the share price back up to ₩41,150 by the end of the trading day on 12 June.

Timeline of the price drop

But Pearl Abyss' plan didn't work as intended. Instead of jumping back in to purchase under-valued stock, institutional investors used the guaranteed buying volume from Korea Investment & Securities as a convenient exit door. They dumped their shares right into the company's own bids. Once the temporary buying window closed, the stock resumed its fall in value. 

And this is coming on today's article in GameRant that after three months user counts on Steam are down 95% from its all-time peak. So despite announcing Crimson Desert had reached 6 million units sold on 12 June, the rice has dropped another 12% over the past 12 calendar days.

The story of the fall of the stock price of Pearl Abyss began with the news of the sell-off of CCP Games (now Fenris Creations) on 29 April. The sales of Crimson Desert, now up to 6 million units, are now baked into the historic revenue calculations. MassivelyOP has noted that any meaningful DLC or major platform expansions for Crimson Desert are mapped out 1 to 2 years away. The next new game in the pipeline, DokeV, is 2-3 years away. Until the new content hits the market, Pearl Abyss needs to depend on the Black Desert franchise for the majority of its revenue for a significant amount of time.

I did get a quote from Gemini I liked about the near-to-mid term future of Pearl Abyss:

By divesting the steady, boring, predictable live-service subscription engine of EVE Online right at this moment, Pearl Abyss successfully turned themselves into a "pure-play" console/premium developer. The problem? The market hates gaps. Investors looked at the 2026–2028 pipeline, saw a multi-year structural drought where Black Desert has to carry the entire corporate overhead alone, and cleared out.

Whether that analysis is correct remains to be seen. But what is indisputable is that since the news of the departure of Fenris Creations from the Pearl Abyss family the stock price of PA's stock has declined 39.4%.