‘Keanu Effect’ Fuels Gamer Hype, But CD Projekt Investors Are More Cautious

While Poland’s biggest computer-game maker is “very happy” with advance orders for its long-awaited blockbuster, investors are more cautious about what is already among the most expensive entertainment-industry stocks.

Two days after actor Keanu Reeves featured in a Los Angeles announcement of the release date

 for CD Project SA’s Cyberpunk 2077, interest from gamers is outpacing that seen in 2015 for the company’s Witcher 3 global hit, deputy Chief Executive Officer Marcin Iwinski said in an interview. Traders are less breathless in their enthusiasm, with CD Project dropping 4.4% in Warsaw Wednesday, erasing gains that followed Reeves’ star turn in L.A.

The “Keanu Reeves effect” and reaction from gamers to a trailer presented at Microsoft Corp.’s Xbox conference was “great,” Iwinski said. Analyst from Trigon, MBank and Jefferies also praised the game’s technical quality.

Collectors’ editions of Cyberpunk, which features Reeves as a key character, are already sold-out in some regions. Iwinski said the game, due to hit the shelves in April 2020, has drawn a stronger initial reaction than Witcher 3, a title that sold 1.5 million copies before it appeared in stores. The positive reception for Cyberpunk at the Los Angeles E3 exhibition came without a playable demo, an exception among the showcased games.

Even after the two-day retreat in CD Projekt’s shares, the stock is still trading near record levels and its valuation of 109 times this year’s expected earnings is unprecedented in the sector. The studio’s approach of focusing on one title at a time underscores the high stakes around Cyberpunk replicating the success of the Witcher series, which has racked up combined sales of more than 40 million copies.

Read more here about expectations around the Cyberpunk release

The studio, known for an approach of releasing games only once they are deemed ready, rather than setting out clear timelines for investors to mark in their diaries, has a record of testing the patience of traders -- and gamers. It twice delayed sales of Witcher 3, with the game’s eventual arrival spurring a more than eightfold gain in CD Projekt’s shares, including a 45% advance this year.

“A few of the earlier bulls who thought a mid- or late-2019 release was a possibility are now repricing their expectations,” Martin Cakl, an analyst at Patria Finance AS, said in an email. “When CD Projekt announced that there won’t be a playable demo at the E3, that should have been enough of a signal to most that the game is still far from release.”