Should Investor Exit This NASDAQ-Listed Entertainment Stock – GRVY

Feb 15, 2022 12:00 AM PST | Team Kalkine
Should Investor Exit This NASDAQ-Listed Entertainment Stock – GRVY

Gravity Co., Ltd.

Gravity Co., Ltd. (NASDAQ: GRVY)  is a South Korean publisher and developer of online and mobile games. Ragnarok Online, GRVY’s primary product, is a popular online game available in 91 markets and countries, including Japan and Taiwan. As of Feb 11, 2022, the company has 6.95 million American Depository Shares (ADS) listed and outstanding, with each ADS representing one ordinary share.

Why Should Investors Exit?

  • Declining Fundamentals:  Net revenues decreased 24.6% QoQ to KRW 97 billion in Q4FY21 (ended December 31, 2021) from KRW 128.67 billion in Q3FY20, attributable to decline in revenue from Ragnarok X, Ragnarok Online and Ragnarok Origin.   
  • Technical Weakness: On the daily chart, GRVY’s prices are sustaining below the downward sloping trend line and facing resistance of the same. The momentum oscillator RSI (14-period) is trading at ~42.83 level, showing that stock is approaching oversold territory. Moreover, the prices are trading below the trend-following indicators 21-period and 50- period SMA, which may act as a resistance level for the stock. An important support level for the stock, is placed at USD 39.50 while the key resistance level is placed at USD 74.50.

Stock Recommendation:

GRVY's share price has declined 43.17% in the past six months and is currently leaning towards the lower band of the 52-week range of USD 57.02 to USD 178.79, considering the company's declining fundamentals, weak liquidity profile, bearish technical and associated risks. We recommend a "Sell" rating on the stock at the closing price of USD 61.78, down 0.37% as of February 11, 2022.   

One-Year Technical Price Chart (as of February 11, 2022). Analysis by Kalkine Group

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.