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Published on
March 28, 2025
5 min read
Ubisoft Shares Surge 12% After Tencent Commits a $1.25 Billion Investment
Shares of Assassin’s Creed maker Ubisoft have risen by 12% after the gaming company unveiled plans to partner with Tencent. Reuters reported that the partnership will involve setting up a subsidiary in which Chinese tech giant Tencent will invest $1.25 billion. The Ubisoft Tencent investment is expected to aid in the recovery of the French video game maker after a weak 2024 performance.
A New Chapter
Tencnt is one of the largest video game makers in the world. The tech giant is also popular for its internet services that include China’s most popular messaging app, WeChat. Under the Ubisoft Tencent partnership, the Chinese tech company will have a 25% stake in the new subsidiary. Ubisoft will hold the rest of the stake, which is valued at about $4.32 billion.
“Today Ubisoft is opening a new chapter in its history,” Ubisoft CEO and Co-founder Yves Guillemot said.
Tencent becomes Ubisoft’s second largest shareholder with an overall stake of less than 10%. Earlier this month, Tencent reported a 90% increase in profits for quarter four. The company attributed the profits to revenues from the gaming industry and advertising.
“We are excited to extend our longstanding partnership with Ubisoft through this investment,” Tencent President Martin Lau said.
The French gaming company is set to close the investment deal by the end of this year. If it succeeds in doing so, Ubisoft’s strategic deal with Tencent could get the game maker’s debt situation under control.
“Ubisoft gains financial flexibility with the cash infusion, which equates to about two-thirds of the firm’s pre-announcement market cap,” Morningstar Analysts said in a note.
An Important Corrective Move
Over the years, Ubisoft market valuation has dropped significantly due to reducing sales and delays in launching new games. This happened even after the shares got a boost earlier this month as investors received the latest instalment of the Assassin’s Creed franchise positively.
The company had delayed the much-awaited Assassin’s Creed Shadows several times after the performance of another major title, Star Wars Outlaws disappointed. These delays raised questions about the management of Ubisoft.
“Ubisoft has all these great games, like Assassin’s Creed, that it’s known for that recently haven’t delivered so much for fans. There are reasons for why that business is now up for grabs and for Tencent it’s an opportunity for them to cash in on these franchises that are so beloved, that have so much street cred for gamers out there,” Shannon Liao, a Video Game Journalist said.
Last week, Ubisoft unveiled the latest installment of the Assassin’s Creed franchise, the Assassin’s Creed Shadows. The video game maker hopes that the return of this franchise will enable it to turn the page on other big flops like ‘Star Wars Outlaws’. The game received positive reception, causing Ubisoft shares to surge by 8% on March 24. The Assassin’s Creed franchise has sold over 200 million copies globally.
Analysts from Erste have termed the Ubisoft Tencent partnership as a ‘strategic corrective move’.
Weak Financial Performance
Ubisoft was founded by the Guillemot family, which still holds the biggest stake in the company. The Guillemots initiated talks with Tencent in September 2024 with a view of recovering Ubisoft’s underperformance in some of its top titles.
Through the new subsidiary, the family plans to run some of the largest Ubisoft franchises, which include Tom Clancy’s Rainbow Six, Assassin’s Creed, and Far Cry. The subsidiary will develop these franchises to strengthen Ubisoft’s balance sheet.
Last year, Ubisoft lost close to 50% of its stock market value after it reported below expectation results, announced game launch delays, and issued a sales dip caution. In February this year, the company announced a 52% drop in its quarter three net bookings.
On March 28, Ubisoft stocks maintained an 8.7% growth after rising 12% during the day’s trading session. The company’s total market capitalization stood at 1.8 billion euros as share prices remained at 14 euros per share.
“This operation highlights the group’s significant undervaluation, which could lead to a slimming down of the rest of its business,” Brokers at Midcap Partners said.
