I just have to ask, who would be making quick profits here? Embracer just recently carried out a large directed share issue, for example, which was at least 30% oversubscribed. Several due diligence processes must have been directed at it. The question raised by that Twitter user is hardly a new thing in buy-and-hold strategies. The basic premise, however, seems relatively simple to consider. I would be more suspicious of the intentions of the Swedish Twitter users, as they are quite well-followed. It’s good, of course, that the discussion gains new dimensions and risks are considered.
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I’m guessing all the analysts, including those from Redeye and the banks, are well aware of this, and based on the tweet’s comments, it has also been highlighted in analyses. The risk here is probably that earnings won’t grow as smoothly in the future as one might expect.
The same has also been said about Talenom from time to time, especially when the sentiment is a bit more negative. Talenom, as I understand it, also capitalizes expenses quite aggressively on its balance sheet, which beautifies the reported earnings in the short term. Still, it seems to be doing well, and as an accounting firm, they probably know what they’re doing.
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Tomorrow is the presentation
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Analysts’ forecasts for tomorrow
addition:
https://twitter.com/KochMedia_HQ/status/1394940940352212992?s=20
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Embracer’s Q4 and full-year results are out. In addition to EBIT and EBITDA, I’m particularly following organic growth, and it’s impressive 
THU, MAY 20, 2021 06:00 CET
FOURTH QUARTER, JANUARY–MARCH 2021 (Compared to JANUARY–MARCH 2020)
Net sales increased by 80% to SEK 2,404.2 million (1,339.1).
Net sales of the Games business area increased by 119% to SEK 1,975.2 million (903.5). THQ Nordic SEK 354.6 million (306.7), Deep Silver SEK 464.9 million (514.7), Coffee Stain SEK 780.9 million (82.1), Saber Interactive SEK 270.7 million (-) and DECA Games SEK 104.2 million (-).
Net sales of Partner Publishing/Film business area amounted to SEK 429.0 million (435.6).
EBITDA increased by 137% to SEK 1,172.5 million (495.2), corresponding to an EBITDA margin of 49% (37%).
Operational EBIT increased by 216% to SEK 903.2 million (286.0) corresponding to an Operational EBIT margin of 38% (21%).
Cash flow from operating activities amounted to SEK 1,521.8 million (765.7). Investments in intangible assets amounted to SEK 598.9 million (464.4). Free Cash Flow amounted to SEK 860.5 million (275.7).
Adjusted earnings per share was SEK 2.07 (0.97).
Organic growth in constant currency for the Games Business Area amounted to 85% in the quarter.
Total game development projects increased 55% to 160 (103). Total headcount increased 103% to 6,325 (3,109) where total game developers increased 116% to 5,115 (2,365).
FULL YEAR, APRIL 2020–MARCH 2021 (COMPARED TO APRIL 2019–MARCH 2020)
Net sales increased by 72% to SEK 9,024.2 million (5.249.4).
Net sales of the Games business area increased by 102% to SEK 6,448.3 million (3,196.5). THQ Nordic SEK 1,789.1 million (1,154.4), Deep Silver SEK 2,081.2 million (1,796.3), Coffee Stain SEK 1,182.5 million (245.8), Saber Interactive SEK 1,185.9 million (-) and DECA Games SEK 209.7 million (-).
Net sales of Partner Publishing/Film business area increased by 25% to SEK 2,575.9 million (2,052.9).
EBITDA increased by 119% to SEK 3,985.3 million (1,821.3), corresponding to an EBITDA margin of 44% (35%).
Operational EBIT increased by 170% to SEK 2,870.8 million (1,033.0) corresponding to an Operational EBIT margin of 32% (20%).
Cash flow from operating activities amounted to SEK 3,899.0 million (1,728.3). Investments in intangible assets amounted to SEK 2,135.2 million (1,653.4). Free Cash Flow amounted to SEK 1,684.8 million (–0.1).
Adjusted earnings per share was SEK 6.44 (2.81).
Organic growth in constant currency for the Games Business Area amounted to 70%.
Total game development projects increased 55% to 160 (103). Total headcount increased 103% to 6,325 (3,109) where total game developers increased 116% to 5,115 (2,365).
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ABG’s comments
Potential consensus estimate changes
We could see consensus 21/22e adj. EBIT estimates come up 7-10% on
the back of the report.
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Great! However, it’s striking that exceeding the forecasts is entirely due to Coffee Stain and Valheim; all other units fell short of their forecasts 
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True, but in a way, you can see the advantage of that diversified portfolio.
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Another great report, as expected. Lars rarely disappoints.
I’m eagerly waiting to see what they’ll do with a war chest of nearly two billion; they can never stop, and they won’t.
The number of employees doubled year-over-year to over six thousand, and there are now 160 game projects. They’ve grown quite a bit from the small company they started as.
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Webcast at 10 AM
https://twitter.com/EmbracerInvest/status/1395269306762530817?s=20
Addition: Redeye’s premium (early access) comments
Redeye (Redi) is very on top of the case with its forecasts, even though the operational EBIT went well over the forecast.
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This seems to be a response to “fintwit” criticism of the operational EBIT metric. The valuations of acquired game projects are taken into account through purchase price allocation (PPA).
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In that slide set, Embracer now explains K3 and the write-downs, how they approach the matter. So, the tweet thread was reacted to.
https://twitter.com/embracerinvest/status/1395288733952446465?s=21
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The next 4-quarter release schedule is heavily weighted towards Q1 2022 (January-March), when game releases are anticipated to represent investments of nearly 200 million euros.
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https://twitter.com/timontti/status/1395444671506259972?s=21
https://twitter.com/timontti/status/1395446265777954816?s=21
Damn, I still can’t type on a phone’s small screen
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Alright, more of these dropping today
https://twitter.com/mandersson9/status/1395616898591690754?s=20
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https://twitter.com/embracerinvest/status/1395669281166266368?s=21
Won’t Redeye also have a company update soon 
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Highlights from the webcast:
- Valheim sold 6.8 million copies during the quarter, with an expected additional 1-1.2 million copies in the current quarter. It has generated over 50 times its development costs/investments so far.
- The figures do not yet include those from acquisitions closed on April 1st, meaning, for example, the number of development projects in the pipeline does not yet include these. On the other hand, the number of shares does not include shares added after the quarter, which is good to keep in mind when looking at EPS, for example.
- On acquisitions: “We are currently in about 20 late stage talks with those entrepreneurs and creators.” Lars also cautioned investors who had asked why there weren’t as many/large acquisitions announced this quarter, stating that there’s no need to rush with these. It’s also good to remember that over 2 billion euros worth of companies have already been acquired this year
- "Easybrain [mobile game company acquired this year] is performing above management expectations"
- The top 10 best-selling games during the last fiscal year generated 44% of game revenue. This indicates a high level of diversification.
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Reading these comments, I can’t help but wonder what it would take for Embracer to break the 300 SEK milestone ? There probably aren’t many analysts who give it a fair value below 300 SEK, and target prices are constantly being raised Oh well, the business seems to be doing well, but in my opinion, this stock is pretty glaringly undervalued ( +23% → upside potential in the stock depending on the analyst’s target price). Plenty of time to load up 
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Biomutant has landed on Twitch. Here’s a big stream if anyone wants to follow the reactions: Twitch
EDIT: Based on the first hour, it looks good and most of the comments are positive. It has already risen to second place in Steam’s global top sellers. Maybe this will turn out well.
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