Pearl Abyss shares down nearly 40% in 3 months as 'Red Desert' momentum fades faster than expected

"We shouldn't be badmouthing SK Hynix." (investor)

"The worst listed company ever." (investor)

Pearl Abyss shares have shed nearly 40 percent over the past three months — a stunning result even as the company swung to a net profit for the period in the second quarter compared with the same period last year. Sales and operating profit both fell short of market expectations.

Particularly striking was how quickly the momentum behind "Red Desert" — seven years in development — faded. Shareholders vented their frustration online, with comments such as "We shouldn't be criticizing chipmakers" and "This is the worst listed company in history."

According to industry sources Friday, Pearl Abyss posted a share price return of minus 38.74 percent over the past three months.

On a consolidated basis, the company recorded second-quarter sales of 192.6 billion won ($136 million) — up 247.7 percent from the same period last year — operating profit of 67.6 billion won, up 7,411.1 percent, and net profit for the period of 70.9 billion won, which represented a swing to profit from a loss a year earlier. Despite those headline figures, the market reaction was deeply negative.

A closer look at the numbers reveals a more complicated picture. Setting aside deferred revenue recognition and labor costs — including performance bonuses totaling 74.8 billion won — the sales boost from the "Red Desert" launch faded faster than anticipated.

After reaching 5 million copies sold on April 15, "Red Desert" took 57 days to sell an additional 1 million copies, a sharp slowdown in sales velocity, according to Eugene Investment & Securities. A growing share of sales through higher-fee channels such as physical disc packages also pushed the average selling price per copy down to around 63,000 won, from 74,000 won in the first quarter.

The early drop-off in "Red Desert" sales is expected to weigh on next year's operating profit as well. Pearl Abyss has signaled plans for an early downloadable content release and a launch on new console platforms, but with the Steam concurrent user base having fallen to the low 10,000s, any revenue rebound is unlikely to be significant, Samsung Securities said.

Adding to the concern is the prospect of a prolonged gap in new releases following "Red Desert," with no major title expected for an extended period.

Pearl Abyss shareholders have been in an uproar. Online forums are filled with comments such as "I can't believe this," "Not a single rebound," "Raise your hand if you're down 40 percent" and "I missed my chance to cut my losses."

Mirae Asset Securities said a "Red Desert" DLC release alone was unlikely to drive a meaningful sales rebound, and that any schedule delay could push guidance estimates even lower. The firm added that the company's next title, "Dokkaebi," could not realistically launch until the second half of 2028 even assuming no further delays.

Eugene Investment & Securities said the factors behind the earnings miss — a shift in the retail channel mix that dragged down the average selling price, deferred revenue recognition from physical package sales, and slowing sales as the launch effect wore off — would inevitably continue to affect second-half earnings.