Shift Up, known for Stellar Blade and Goddess of Victory: Nikke, still plans to list its shares on the Korea Stock Exchange. However, the company recently faced some challenges from local financial authorities.

Shift Up postpones IPO, with regulators seeing risks in its overdependence on NIKKE

Goddess of Victory: Nikke

What happened?

Earlier this week, several South Korean outlets reported the news, saying that Shift Up recently filed a corrected version of its securities report regarding its upcoming public offering. The company decided to postpone demand forecasting for institutional investors from June 3 to June 27, while the IPO subscription was moved to early July.

This comes shortly after the Financial Supervisory Service (FSS) requested a correction and subsequent adjustment to the listing schedule. According to NewsPrime, Shift Up’s initial report didn’t meet the screening standards of the financial authorities.

Despite the regulator’s request, Shift Up said it made the changes “voluntarily.” The company added that it wanted to provide investors with clearer information and additional time to make decisions in preparation for the IPO.

Speaking of the upcoming public offering, the expected share price ranges from ₩47k to ₩60k ($34-43.5) per share. Following the IPO, Shift Up could reach a valuation of ₩3.48 trillion ($2.53 billion).

What concerns do regulators have about Shift Up?

  • The FSS is worried about the long-term sustainability of Shift Up’s business. Its success currently hinges on the future of a single game, which some experts consider a huge risk factor.
  • In 2023, Shift Up’s annual revenue grew 154.5% year-over-year to ₩168.6 billion ($125 million). However, royalty sales from Goddess of Victory: Nikke accounted for 97.58% of the total, and such overdependence on one title could be seen as a worrying sign.
  • The authorities also recalled that Shift Up ceased further development and maintenance of its mobile battler Destiny Child last September. According to AppMagic, it had nearly $160 million in lifetime revenue, but the studio explained that “the number of users and sales decreased” as the game’s gradually reached the end of its lifecycle. Shift Up doesn’t rule out the possibility of closing Nikke if it sees a sharp decline in the number of players over time.

Destiny Child’s monthly mobile revenue

  • Another point of concern is that the company relies on contracts with third-party publishers: Stellar Blade is distributed by Sony Interactive Entertainment, while Goddess of Victory: Nikke is operated by Tencent’s subsidiary Level Infinite.

Shift Up filed for an IPO in March, set to become the first South Korean gaming unicorn to go public after Krafton. In 2021, investors expressed similar concerns about the PUBG maker, worrying that it might be a one-hit wonder due to its overdependence on a single game.

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