Rovio, the developer and publisher of the smash hit Angry Birds franchise has lost 500 million in value in the last day. In a perfect example of just how volatile the market can be, Rovio’s company value dropped by half in just day since they released their 2018 profit forecast. Rovio was valued at $1.1 billion at its initial offering in October 2017, and the dip in stock prices now places their value somewhere below 500 million.
Why did Rovio Stock Drop so Suddenly?
Profit forecasts and revenue calls are times you’ll see significant swings in a company’s stock prices. However, we seldom see a drop as big as Rovio’s over just one forecast. Rovio stock closed on NASDAQ Helsinki at €9.95 on Wednesday and over the course of yesterday plummeted to a low of €4.94. The stock has recovered by €0.05 and is holding at €5 on the dot as of writing.
Experts point to the sharp drop stemming from the projection that Rovio profits will be down this year ($319 million vs. $365 million in 2017) and from investor mistrust stemming from misleading statements Rovio has made in previous years concerning future profit forecasts.
A big problem with Rovio is that they’re hitting the point where Angry Birds is suffering from franchise fatigue. The novelty has worn off, and there’s only so many crossovers you can do before fans stop caring. Additionally, while last year’s The Angry Birds Movie was a financial success ($349.8 million box office vs. $73 million budget), it failed to woo critics or leave lasting impressions on audiences.
Seeing as Angry Birds is Rovio’s one-trick pony, it makes sense why investors are wary of the company. Fans aren’t likely to get any more excited over the 20th title in the Angry Birds franchise than they did the 19th, and the lack of innovation in the series will likely prevent Rovio from attaining another smash hit.