Angry Investors Crush Angry Birds Maker

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Rovio Entertainment, most well-known as the maker of Angry Birds games, suffered a stock sell-off of over 44% to €5.50 as it posted poor results and an even worse forecast.

The starkest indication is how much revenue growth slowed:

For the full year 2017:

Rovio’s revenue grew 55 percent to 297.2 million euros (191.7 million euros)
Games: revenue grew 55.9 percent to 248.0 million euros (159.0 million euros)

For the fourth quarter of 2017:

Rovio’s revenue grew 17.0 percent to 73.9 million euros (63.2 million euros)
Games: revenue grew 42.3 percent to 66.1 million euros (46.5 million euros)

Management boasted that EBIT more than doubled to €10.4 million in the fourth quarter compared to the same period of last year. Investors obviously were not impressed.

As for the 2018 forecast:

Rovio Group revenue is expected to be 260-300 million euros in 2018 (297 million euros in 2017). Rovio’s profitability as measured by earnings before interest and tax excluding items affecting comparability is expected to be 9 to 11 percent (10.6 percent in 2017).

The company, in other words, does not expect to grow.

Like some games, Angry Birds may have hit its peak demand. This has happened at other game companies that rely heavily on one or two games for most of their revenue. And, if this demand has peaked, Rovio investors have to live with the fact that the company’s best days are behind it.