Ubisoft’s Stock Plummets Below €10 Amid Tencent Deal Revolt

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Ubisoft’s financial troubles have escalated significantly. On April 5, 2025, the company’s stock dropped below the important psychological and financial mark of €10 per share, which serves as a warning to investors that Ubisoft is now viewed as a risky investment.

The value of Ubisoft’s shares has dropped to levels below €10, which is a warning sign in the financial industry indicating that the company might turn into a low-priced stock known as a “penny stock.” This downward trend initially becomes apparent when share prices reach single digits, causing concern among investors who now consider Ubisoft a “toxic asset.” This label signifies that it’s a risky investment leading to more sell-offs.

Reaching this small achievement is usually the first sign of a cancerous situation that can bring instability and, in extreme cases, financial ruin. But there’s a darker truth lurking beneath: as of April 5, 2025, Ubisoft’s estimated net worth is around €1.366 billion, a number overshadowed by the reported debt it carries.

In simpler terms, as of September 30, 2024, Ubisoft’s non-IFRS net debt stood at €1.102 billion and IFRS net debt reached €1.408 billion. Given the ongoing financial strain, this debt likely exceeds the company’s current market value. This challenging state of affairs leaves Ubisoft grappling with significant issues such as potential inability to meet payroll expenses or capitalize on its intellectual properties for a substantial turnaround.

It seems that Tencent might take over Ubisoft soon, but this acquisition won’t prevent the ongoing layoffs. Inside sources indicate that the major downsizing is still ahead, with a significant restructuring anticipated between June and July 2025. This timing corresponds with their next financial report, which aims to revise their accounts and manage growing debt obligations—however, it might come too late to make much difference.

It’s clear that the last piece has been put in place, and it seems Ubisoft is steadily sinking into a pit they dug themselves, symbolically speaking. The Ubisoft we once knew, a giant in the gaming world, appears to be on an undeniable course towards its downfall.

Currently, Ubisoft’s shares are being traded at approximately €8.83 on Euronext Paris. Over the past five days, this stock has dropped by more than 21%, and if we look back a year, it has decreased by nearly 58%. The market value of the company is now roughly €1.25 billion, which is less than the debt Ubisoft still owes. This situation is financially precarious, and the cause for this downward trend is evident.

The recently disclosed partnership with Tencent to establish a new subsidiary, owning three of Ubisoft’s most prized assets—Assassin’s Creed, Far Cry, and Rainbow Six>—was intended as a lifesaver. However, it’s being viewed more as a corporate act of predation. Tencent invested €1.16 billion for a 25% share in the new entity, valuing Ubisoft’s properties at €4 billion before the deal. Yet, this estimated value hasn’t allayed investors; instead, it has raised concerns.

After the deal was revealed, Ubisoft’s stock dropped more than 24% as fear spread among investors. Critics argue that the deal’s structure was deliberately constructed to prevent a mandatory public takeover, ensuring control remains primarily with the Guillemot family, who now own less than 10% of Ubisoft economically.

Now, a revolt is underway.

As a passionate moviegoer, I’m part of a rising group of investors, AJ Investments, who have penned an open missive urging for decisive action. We’ve appealed to the French judicial system, requesting them to mandate Ubisoft to convene an Extraordinary General Meeting (EGM). This gathering is intended to vote on two significant proposals we’ve put forth.

  1. Restructure the Tencent deal as a direct asset sale worth no less than €4 billion.
  2. Distribute an extraordinary dividend of €23 per share in cash (totaling €3 billion) to shareholders.

The letter alleges that Ubisoft’s top management has been operating independently and keeping shareholders in the dark about a recently announced deal, implying: “Shareholders are uncertain as to how this deal, unveiled last week, will eventually bring advantages to Ubisoft shareholders. This strongly suggests that investors are dissatisfied with the proposed deal, which seems to circumvent mandatory public offer regulations and aim to strengthen control by the Guillemot family.

AJ Investments aims to prevent Tencent from having a say in this issue and reduce the impact of the Guillemot family’s decision-making power, based on claims of potential conflicts of interest and infringement upon shareholder prerogatives.

Currently, Ubisoft finds itself in a precarious situation. Not only has the company suffered a blow to its investor confidence, but it also faces the potential of external oversight over its internal management structure due to legal proceedings. If an Extraordinary General Meeting (EGM) is approved, it could result in a significant shareholder decision that may lead to the sale of Ubisoft’s main franchises or require the leadership to pay massive amounts to satisfy stakeholders.

The ongoing rumors of job losses are growing louder, fueled by the poor performance of Assassin’s Creed: Shadows and other games that have failed to boost revenues. Industry insiders anticipate that the upcoming months, June and July, might see the largest scale of layoffs yet.

Ubisoft is stepping into unknown realms. The future outcomes for them might not just determine their own destiny, but also significantly influence the entire gaming sector’s perspective on corporate responsibility within video games.

That Park Place contributing reporter Francesco Solbakk contributed to this report.

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2025-04-07 18:55