We know there are a bunch of people who work at Gamestop and Best Buy here. Perhaps you guys can share a bit on how you guys order inventory and if you guys can return excess copies of games that never sold. I don't know if this is known at the retail level or we need somebody on the supply chain side...but perhaps someone can shed some light here.
Retailers absorb price cuts on just about everything else they get in (except for new DVDs, could be more examples but that I know for sure), so why would they get special protection on games?
@Laoldar, the current 90 DKP stock price is definitely indication there is doubt that Ubisoft has actually sold 950,000 copies of the game rather than shipped.
If it were just people getting bored of the stock and moving capital elsewhere, the market makers would maintain an at least 95 DKP bid price.
Now that is the market interpretation. Personally, I don't know about this. The statements clearly say sold not shipped. Channel stuffing doesn't mean you sold any copies. Publishers can "ship" as many as they want at launch, but that doesn't mean they have sold them.
I know for sure the retailers don't just pay $42 for each copy of a $50 game at launch for X copies of the game and then hold on to all those copies as they price cut over time (thereby losing $12 on cost of materials when the game is only $30). The retailer gets price protection from the publisher if they decide to budget the game down in price.
If I'm not mistaken, from the publisher's viewpoint it doesn't matter. Once it's shipped out to retailers, they've received their money. If the retailer doesn't sell it, that's their problem...the publisher has already received their payment. Whether it's sold that week for $50 or 6 months from now for $15, it'll eventually be sold. People shouldn't care about sold/shipped except for tracking trends on games for future sales.
This stock trading below 95 means two things: 1) Most traders feel that the number won't be moving much higher than 95 and their money is better invested elsewhere 2) Many people are confused as to what shipped/sold means to a publisher.
Except in cases like the GTA Hot Coffee recall, I don't believe that games get returned to publishers (unlike DVDs).
I thought the number 950 came from Ubisoft in a quarterly update to shareholders. Would S.O. in the US not prevent them from misleading investors with sold/shipped ambiguities?
If they say sold and are accounting for it (in the real sense of accounting) I can't see it as being interpreted in any other way.
I haven't looked closely at their filings but do they carry a returned from retailer provision in their future outlook? If not, this HAS to be 'sold'.
Just my .02. I have NO position in this stock (on SE or real life)
I'm willing to wager that Red Steel did not "sell" 950K units. I believe this stock is overvalued and though 950K units HAVE shipped, the game's sub-par reviews will ensure some of those units will never be sold.
There is controversy over whether Ubisoft has SOLD or SHIPPED 950k copies as there was no indication from NPD that the game was selling that well. That is the reason the stock has fallen from over 100 DKP to below 90 DKP as some believe the actual sell through is below 900,000 copies.
Erik, good additions. One thing to point out is that experts generally agree that insider trading is good for prediction markets as the purpose is to get a more accurate prediciton. Insider trading actually is not harmful to the markets, as the people the insiders trade against would've bought or sold the stock anyways. We just have laws against it because some people want investing to be more "fair."
Ideally, we have thousands of traders on who watch the news every moment of the day who constantly post limit orders to make markets so that no NPC market makers are necessary. In this case, smart players who see the news who move their bids and ask orders up to 95 DKP and everyone who is not in the know would end up selling their shares cheap.
That's all well and good that this news from ubisoft was found, but what about all of the other IPOs where the news related on their sales isn't found?
Also, the big difference between us and the real market is that the real market invests in the company, not the games. If a game does well, invest in the company.
Right now, Red Steel is selling at 88.24 DKP. We're 100% sure that it's sold over 900k. So if we're emulating reality, the bare minimum this stock could ever get to is 90 DKP.
In reality, investors would be investing in a company not a game. The market can continue to fluctuate on that price until that company goes off the market. Games cannot function like this.
Anyway, I do agree it's a problem from both sides, but when I see a 100% increase in a stock, it makes me wonder...
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