Digital Gaming Expansion Will Revitalize Cyberpunk And Witcher

Key Takeaways

• Launches on new platforms and expansion into transmedia are set to broaden audience reach and create new, recurring revenue streams.
  
• Increased investment in development teams and digital sales strategy is driving stronger pipelines and improving long-term margin potential.
  
• Heavy reliance on a few franchises, slow adaptation to industry trends, and lack of recurring revenue streams heighten earnings risk and threaten long-term growth prospects.

Catalysts

Together its subsidiaries, engages in the development, publishing, and digital distribution of video games for personal computers and video game consoles in Poland.

• Analyst consensus expects the Nintendo Switch 2 launch of Cyberpunk 2077: Ultimate Edition will result in a temporary sales lift, but the reach of a launch title on a new, mass-market console is likely being underestimated-this could unlock a significant new, younger global audience for the Cyberpunk franchise, supporting not just a strong Q2 but sustained franchise revenue growth into 2026 and beyond.
  
• While analyst consensus expresses caution about higher R&D and development team investments compressing margins in the short term, these investments are accelerating project pipelines, with Witcher 4, Cyberpunk 2, and multiple unannounced projects progressing simultaneously-this positions CD Projekt for recurring, multi-franchise game launches and a smooth revenue cadence, likely driving faster revenue growth and ultimately higher operating margins as launches scale.
  
• The growing success of digital distribution platforms, as seen through the 11% sales growth of GOG.com driven by preservation and classic titles, highlights CD Projekt's ability to drive high-margin digital sales, which should translate to improving net margins as back-catalog and digital monetization become even more important in the industry.
  
• The ongoing robust sales of older titles-Witcher 3 surpassing 60 million units and Phantom Liberty expansion exceeding 10 million sales-demonstrate exceptional evergreen value of CD Projekt's IP, offering recurring high-margin revenue that stabilizes earnings even between major new releases.
  
• CD Projekt's parallel expansion into cross-platform launches, transmedia projects, and the development of three unannounced projects (including non-gaming initiatives) positions it to capture new recurring revenue streams and benefit from global growth in interactive entertainment, merchandising, and IP value appreciation, which should enhance both topline growth and earnings visibility over time.

CD Projekt Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on CD Projekt compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming CD Projekt's revenue will grow by 91.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 46.3% today to 61.2% in 3 years time.
• The bullish analysts expect earnings to reach PLN 4.2 billion (and earnings per share of PLN 43.33) by about August 2028, up from PLN 455.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 11.3x on those 2028 earnings, down from 55.2x today. This future PE is lower than the current PE for the PL Entertainment industry at 13.6x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.58%, as per the Simply Wall St company report.

CD Projekt Future Earnings Per Share Growth

Risks

• CD Projekt remains heavily reliant on blockbuster releases from just two main franchises, The Witcher and Cyberpunk, making its revenues and earnings highly cyclical and exposing future cash flow to significant volatility if future titles underperform.
  
• Demographic shifts are driving gaming growth toward mobile and casual experiences, yet CD Projekt shows limited progress in mobile development, which could constrain revenue and long-term addressable market size as traditional AAA console and PC titles become a smaller share of the industry.
  
• Despite some positive remarks on Cyberpunk 2077's upcoming Switch 2 release and past sales milestones, the company's lack of diversification into recurring revenue streams such as live service games or subscriptions increases vulnerability to single-title underperformance and earnings instability.
  
• Rising development expenditures and a growing workforce suggest that future AAA projects will entail even larger investments amid industry-wide inflation and higher consumer expectations, increasing the risk that margins and net profitability will be compressed if future launches do not generate blockbuster returns.
  
• As industry giants consolidate and subscription services like Game Pass proliferate, smaller independent studios like CD Projekt may face diminished bargaining power, less favorable revenue shares, and reduced direct customer relationships, posing long-term threats to both revenue growth and the company's earnings profile.

Valuation

• The assumed bullish price target for CD Projekt is PLN350.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of CD Projekt's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of PLN350.0, and the most bearish reporting a price target of just PLN95.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be PLN6.9 billion, earnings will come to PLN4.2 billion, and it would be trading on a PE ratio of 11.3x, assuming you use a discount rate of 11.6%.
• Given the current share price of PLN251.9, the bullish analyst price target of PLN350.0 is 28.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.