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So uh I'm an avid grand strategy player and I keep track of the stock of Paradox and it recently came down to a value that I consider interesting. I established a position with a 126.3 SEK cost basis and I consider the stock to have significant upside from here. The company has a massive moat on grand strategy games and the business is pretty reliable and secure. They genuinely have no competitors in the market. Stellaris, recently released Europa Universalis V, Hearts of Iron IV, Cities Skylines will continue to generate reliable revenue for them in the long-term. People don't stop playing video games and buying DLCs in recessions, in fact they buy them more. So it's resilient as well.
The recent fall happened because they wrote-down this game called Vampire: The Masquerade - Bloodlines 2 (they own the IP, they didn't develop the game but funded it, they are just the publisher). They reported an operating loss of -245.4M SEK \[$27.4M\] for 2025 Q4. This was caused entirely by the massive write-down of 355M SEK \[$37M\] related to the game I mentioned. The game flopped, sales were low, which led to the write-down.
They have an annual dividend coming up in May, 2026, 5 SEK. Which gives a 4.05% dividend yield, higher than the Swedish risk-free rate. This dividend is 42% of their current operating cash-flow.
It closed trading at 123.3 SEK this Friday. Here are the valuation metrics using this price:
* Market Cap: $1.44B.
* Enterprise Value: $1.30B. -they have more cash than debt-
* Price-to-Cash-Flow: 10.5x
* EV / EBITDA: 8.9x
* Price / Sales: 5.9x
* Base Case Forward P/E regarding 2026: 22.3x
* Bull Case Forward P/E regarding 2026: 19.4x
Bullish Indicators:
1. Europa Universalis V was released in November and it's looking good. I played the game and I liked it. Although to be honest I still prefer Europa Universalis IV. The game lacks content and some mechanics are frustrating. But the future DLCs should get the job done.
2. They applied to join the Nasdaq Stockholm Main Market just days ago. If they do, index funds and institutional investors may drive the stock price up in the short-term.
3. Immediately following the earnings and the stock drop, the CEO and several board members bought shares worth $673k. The second-largest shareholder, Spiltan, bought about $7M worth of stock in early February.
4. It's historically cheap.
Bearish Indicators:
1. They have this game called Prison Architect 2, not released yet, that will definitely flop. Again, they own the IP, outsourced the development, just gonna be the ones to publish it. If they write this down in the future it may drive the stock lower, although maybe it's priced in by now. I don't know.
2. Cities: Skylines II had a bad buggy launch in 2023. So probably priced in by now.
\*(Note: Converted SEK to USD using 9.06 rate for this post)