Games

Square Enix Stock Plummets After Disappointing Q3 2024 Earnings

Published

2 weeks ago

November 11, 2024

Christoph Rediske

Key Takeaways

Table of Contents

Square Enix stock plummeted over 10% on November 11.
The decline is attributed to the company’s latest financial report, which revealed a 27% year-on-year operating profit decline in Q3 2024.
While Square Enix’s income for the six-month period ending September 2024 was still up compared to a year ago, investors seem to be skeptical about its near-term prospects.

Square Enix stock plummeted over 10 points on Monday, November 11. The company hence lost the equivalent of hundreds of millions of dollars in market capitalization, with this turn of events likely being prompted by Square Enix reporting some mixed financial results.

Square Enix’s operating profit has been on a steady decline since its 2022 peak. The Japanese gaming giant’s latest financial report suggested that this trend might have finally reversed, with the company reporting that it generated $136 million in profit over the six-month period ending September 2024, a 22% year-on-year increase.

Square Enix Reveals Plans to ‘Aggressively Pursue a Multiplatform Strategy’

Square Enix announces a multi-platform pivot, suggesting PlayStation could be losing the source of some of its biggest third-party console exclusives.

Square Enix’s stock still declined by over 10% by the close of trading at the Tokyo Stock Exchange on Monday, November 11. Some Japan-based industry watchers speculate this development can be attributed to a number of troubling figures contained in the company’s latest financials. E.g., although the operating profit for the reported six-month period has increased year-on-year, it has most recently been on a heavy decline, falling 27% in Q3 2024. Combined with the fact that Square Enix’s premium game sales are down year-on-year, this decline might be what prompted the investor sell-off that caused the company’s stock to plummet.

Square Enix Lost $350m in Market Cap Since the Start of November 2024

At the beginning of November 2024, Square Enix was valued at $4.68 billion, based on its stock price and the number of outstanding shares. The weekend after its latest consolidated financial report was published, its valuation was approximately $350 million lower. While stock prices aren’t always perfectly reflective of any given company’s current health, they do indicate investor sentiment. And investors currently don’t seem to be particularly optimistic about Square Enix’s near-term prospects.

The Japanese group’s latest earnings report did not include a sales update on Final Fantasy 16, which the company itself previously said underperformed. The JRPG also had a somewhat quiet PC launch after finally reaching Steam back in September 2024. Square Enix last said that FF16 sold 3 million copies on the PS5, but that was during its launch week in June 2023. According to an average of third-party estimates by Gamalytic, VG Insights, and PlayTracker, the game sold roughly 289,000 units on Steam as of November 11.

Moving forward, Square Enix intends to try reinvigorating its declining game sales by moving away from exclusivity deals in favor of multi-platform publishing. The company said as much back in May 2024, when it announced plans to “aggressively pursue” such a strategy. Before that happens, the developer-publisher will release at least one more timed PS5 exclusive, the final entry in the Final Fantasy 7 remake trilogy.