Miniatures of medieval fantasy worlds and futuristic wars are making a respected name on the British stock market. The classic Warhammer game, which has been around for almost 4 decades, has been growing steadily in recent years. Parent company Games Workshop has accelerated its revenue and profits since 2017, and its stock price has climbed 1,876% over the past 8 years, or 45.8% annualized over that time. Last week, the icing on the cake: after improving its revenue forecast, the company’s shares rose 17% on Friday, a rally which allowed the company to increase its capitalization by 642 million pounds in one single day. Today, the entire company, which continues to open new commercial avenues linked to the universe it created 46 years ago and prepares new audiovisual content with an agreement with film studios of Amazon, reached a valuation of 4.5 billion pounds, and Knocks on the door of the UK’s largest stock market index: the FTSE 100, where the major British “blue chips” are listed.
What started in 1975 as a small company dedicated to manufacturing boards for board games such as backgammon, mancala or Go, ended up becoming a complete fantasy universe a few years later, set in a sister world of the one created by JRR Tolkien in the beginning. of the 20th century. Dwarves, dark elves, wererats, and even a futuristic tradition with space marines and a race of orcs that had managed to persist until the age of spaceships, won over several generations of fans of miniatures and role-playing games. Games Workshop has been making money from this for almost 50 years.
The business was so successful that the company ended up knocking on the doors of the most exclusive club on the British stock market: the FTSE 100 index, which brings together the hundred most important companies on the British stock market. According to the agency Bloombergsome analysts are already starting to propose the inclusion of the company in the main English selective, a decision on which there will be more information this Tuesday, when FTSE Russell announces the companies that choose to enter the selective, a decision which will be taken on December 3.
The market capitalization of companies is key to inclusion in the selective index, since the index includes the 100 largest companies by capitalization on the London Stock Exchange, provided they meet the necessary liquidity criteria. And in this case, Games Workshop now has enough capitalization to be part of the FTSE 100since, after the rise that the company experienced on Friday, its market capitalization climbed to 4.5 billion pounds, a new record for the company, which would place it, according to data from Bloombergas the 73rd largest in the entire UK stock market.
The company’s entry into the FTSE 100 could give new impetus to the company’s shares, since funds that reproduce the behavior of the British selective would be obliged to buy shares of the company in order to correctly emulate the movements of the index.
Rapid growth since 2017
Games Workshop’s big leap came in 2017. Until that year, the company had always fallen below £300 million in capitalization. It was at this point, in 2017, that the company’s revenues and profits began to skyrocket. quickly, giving rise to a stock market rally that has lasted for 8 years, although there have been ups and downs in between.
Over the past 8 years, the company’s shares have appreciated more than 1,870%, representing almost 46% year-over-year growth during that time. Last Friday’s price increase was driven by the company’s improved outlook, which now acknowledges it will make a pre-tax profit of £120 million in the first six months of 2024, a growth of 25% compared to the same period of the previous year, and which exceeds the expectations that existed until that moment.
How has Games Workshop managed to accelerate its business? The company is divided into three branches: retail, trading and licensing, and all three have shown strong growth in recent years. It was in 2017 that revenues began to rebound strongly, and since then, they have maintained sustained growth every year. In 2016, Games Workshop ended the year with £118 million in revenue, an amount that grew by 33.8% in 2017, and continued in subsequent years: 39% per year in 2018, 16%. in 2019, 5% in 2020, 37% in 2021… like that, to reach $525.7 million in fiscal 2024, its best year ever (the fiscal year ended last August).
The company has managed to increase the weight of its “commerce” activity, which consists of sales to establishments that have its products, but which are not part of the Games Workshop store network, until it becomes its main sales sector. activity with 54.9%. compared to 22% represented by sales in its own stores (retail) and 17.7% by online commerce. It is striking to note that the latter, in the midst of the digital age, is losing weight for the company year after year compared to traditional activity, even if online sales also increase each year. Consumers still want classic figures and are heading to physical stores, where Games Workshop has managed to build a strong fan community.
But it’s not just about painting miniatures and playing with them on a physical board: part of the company’s growth has been achieved through the launch of gaming-related content, like books, magazines or still short films broadcast on a television. channel. streamingWarhammer+, which already has more than 170,000 subscribers. In addition, the company has launched several video games, in collaboration with other famous titles, which have also made a place for themselves in this universe.
The last big step for the company was the agreement with Amazon, announced last December, to prepare new audiovisual projects, whether films or series, in the years to come. Involved in this project is the famous actor Henry Cavill, who, being a fan of Warhammer since childhood, signed a deal to star, write and produce future Warhammer 40,000 content. These collaborations are under threat, as Games Workshop recently announced that Amazon Studios could lose the rights if progress is not made on production plans before December.
Whether this project closes or not, what is clear is that the Warhammer universe is more alive than ever, to the point of being able to become one of the most prestigious companies on the British stock market, if it finally enters the FTSE 100. in the coming months.
