Due to Brexit and the lack of vibrant technology companies, the UK stock market has been quite bleak in the past 5 years. Instead of pouring money into this market, if an investor chooses the S&P 500 simulated index fund and reinvents the dividends, it will now have double the amount.
But recently on the UK stock market there has been a stock that has grown even better than Amazon and Tesla. More notably, the company’s core business is not in the digital realm.
That is the Games Workshop Group Plc. The Nottingham-based company is the producer behind hit game Warhammer 40,000. The sudden spike in revenue and profit in the second quarter coupled with the prospect of dividends helped Games Workshop’s stock increase by 10%, bringing its market capitalization to £ 3.2 billion (equivalent to $ 4.2 billion). .
This stock has risen nearly 1,600% in the past 5 years and if shareholders reinvest their dividends, they will return a yield of 2,140% – the highest in the FTSE All-Share Index. As a percentage, only two companies in the Nasdaq 100 – two chipmakers AMD and Nvidia – have grown stronger in the same period. Aside from BlackRock, Games Workshop’s biggest shareholder is the asset management company JP Morgan Chase.
Warhammer is a table top game in which players buy small plastic monster models, spend hours assembling and even then paint them in their own style, eventually. is to bring to the competition on the 3D self-made tables or buy from the manufacturer with a variety of environments such as hills, cities, forests or space.
In the era of mobile titles like Fornite and Call of Duty so popular today, you might think that this genre of games is not that attractive. In addition, the regulations on social distance mean it is difficult to gather friends to play such a game. However, Games Workshop thinks that is their advantage.
“In our game, people in a room actually interact with each other, not through a screen. These are really social games, creating community and giving out. Immersive experiences like you are commanding a real battle.
To collect a powerful “army”, players have to spend a lot of money – which will become big trouble during the economic downturn. However, the company’s business is still booming thanks to online sales and its efforts to connect players through social networks as well as its website. The Warhammer player community has grown by almost 40%, to more than 8 million people since last year.
Like puzzle games, painting models also becomes more enticing when blockade commands leave many people too free to spare. Of the £ 270 million in Games Workshop’s annual revenue, about 75 percent come from overseas markets and North America is currently the largest. The reach of customers has also expanded significantly, not just limited to teen groups.
The Games Workshop not only stands out because of its soaring stock prices, but also in a rather conservative management style. The company has virtually no debt, and the investments are entirely financed by the company’s own cash flow. Due to its large cash reserves, Games Workshop did not face financial trouble as stores and factories closed for several weeks this past spring due to disease. The company still pays full dividends.
The residual margin is up to 33%. Each store usually has only 1 employee, helping optimize costs. Games Workshop also earned quite a bit of royalties when characters from the WarHammer game game were used in the game and was thinking of the same thing on television.