Broker Liberum has downgraded tinyBuild Inc to a ‘hold’ from a ‘buy’ rating, citing “concerning” figures after the release of its Hello Neighbour 2 game on December 6.
Outlining how initial reviews of the video game from players and critics have been worse than expected and that the number of users so far playing the game is below those seen for the first Hello Neighbour, Liberum’s analysts suggested tinyBuild’s “major release” of 2022 has been disappointing.
“Though the data we have is limited (only on PC, whereas the game is predominantly a console game), and with the caveat that it is early days, it is still concerning.”
In spite of the poorer stats seen during the first week of the game’s release, forecasts for tinyBuild for this year were left unchanged, but instead the analysts suggested the shares’ ratio of risk and reward in the short-term was “no longer favourable”.
The target price was cut to 130p from 215p.
The computer games developer outshone expectations when it published first half results in September, with revenue jumping by 54% to US$28.8mln alongside operating profit by 33% to US$6.8mln.
While Liberum suggested the poor initial week for the game poses “little risk” to tinyBuild’s full-year results in 2022, with much revenue expected to be secured through upfront Xbox games passes, it predicted a potential knock on effect to its balance sheets into 2023 if the numbers do not improve.
Shares in tinyBuild fell by 0.86% to 115p on Tuesday.