Can Krafton address investors' concerns about stock price?

Audiences visit Krafton’s booth at G-STAR 2025 in Busan, Thursday. Korea Times photo by Nam Hyun-woo.

BUSAN — Krafton, the Korean game developer behind hits like PUBG: Battlegrounds, saw its stock price drop 28.3 percent over the past six months, from 376,500 won on May 12 to 270,000 won on Friday.

Over the same period, the country’s benchmark KOSPI jumped 59.2 percent, while another domestic game giant Netmarble saw its stock rise 10.9 percent. Although listed on the Japanese stock market, another Korean game titan, Nexon, recorded a 62.7 percent increase in its stock price.

The company’s absence from the broader stock rally came despite its solid earnings. Buoyed by the steady popularity of the PUBG franchise, Krafton has been posting record-high earnings almost every quarter. Most recently, the company, for the first time, surpassed the 1 trillion won ($680.6 million) mark in its cumulative operating profit — from January to September — after posting 870.6 billion won in sales and 348.6 billion won in operating profit for the third quarter.

The fundamental reason behind its sluggish stock performance is that its pipeline of new titles have yet to meet the expectations.

The company’s major releases for 2026 are expected to be Palworld Mobile, an open-world survival and monster-taming mobile game, and Subnautica 2, a sequel to the 2018 hit survival game Subnautica.

Audiences queue to test Krafton's Palworld Mobile at the company's booth at G-STAR 2025 in Busan, Thursday. Korea Times photo by Nam Hyun-woo

At the 2025 G-STAR game convention in Busan, which kicked off on Thursday, Krafton offered a demo of Palworld Mobile, which will launch its closed alpha test in Korea and Japan next month.

Palworld Mobile is the mobile version of the 2024 title Palworld by Japan’s Pocketpair. The original Palworld has attracted more than 32 million players, fueled by positive user response for its gameplay, in which players collect monsters called Pals and build their own bases through combat and construction.

Gamers who tested Krafton’s Palworld Mobile at the booth also gave positive feedback. One user said the controls for crafting and base building were well adapted to the mobile environment. Another tester noted that the game’s overall look was cute enough for newcomers to enjoy, even if they weren’t familiar with the original title.

Seen above is the gameplay of Palworld Mobile available at Krafton's booth at G-STAR 2025 in Busan, Thursday. Korea Times photo by Nam Hyun-woo

Despite favorable early feedback, doubts remain over whether Palworld Mobile can make a meaningful contribution to Krafton’s growth trajectory.

“Given the nature of their genres, neither Palworld Mobile nor Subnautica 2 is likely to drive companywide growth on its own,” DS Investment & Securities analyst Choi Seung-ho said. “Ultimately, Krafton’s 2026 earnings will also be swayed by PUBG.”

With Pocketpair owning the intellectual property for Palworld, industry experts anticipate that royalties to the Japanese company will be inevitable, which could constrain the game’s profitability.

In terms of Subnautica 2, development is being handled by Unknown Worlds Entertainment, a wholly owned Krafton subsidiary. But since Krafton already spent more than 650 billion won upfront while acquiring Unknown Worlds, the commercial success of Subnautica 2 has become more critical for the company.

Visitors take photos with mascots of Palworld Mobile at Krafton's booth at G-STAR 2025 in Busan, Thursday. Courtesy of Krafton

Analysts and industry experts say Krafton will ultimately need a successful AAA-grade title, typically a game with a budget over $100 million, to reassure the market.

Krafton launched early access for its AAA-grade life simulator InZOI in March. Initial reactions were positive, but the official release has been delayed until next year, meaning it will take some time before the game can generate profits.

The company is also working on a AAA title based on the Korean fantasy novel “The Bird That Drinks Tears,” and PUBG Studios Madison is also developing a AAA-grade console shooter. But analysts say the company’s pipeline will need to take clearer shape before investors can reassess the company’s value.

“We believe Krafton will establish itself as a major player of the global gaming industry through its investments, but it is also difficult to reflect that outlook into valuation without a clearer pipeline,” Choi said.