On Thursday, a Jefferies analyst maintained a Buy rating on NEXON Co., Ltd (3659:JP) (OTC: NEXOF) with a stock price target of JPY4,230.00. The endorsement comes following reports that Tencent has withdrawn its Dungeon&Fighter mobile game, also known as DNFm, from certain app stores.
The decision by Tencent to directly reach consumers is seen as a confident move that could potentially increase net revenues by avoiding app store fees.
NEXON, which benefits from a share in the net revenues Tencent earns from app stores, could see an upside from this strategy. The move implies that both Tencent and NEXON stand to gain if the direct-to-consumer approach leads to higher net revenues, as platform fees would no longer be shared with app stores.
The analyst's commentary highlighted that Tencent's broad user base in China could be leveraged to draw players to the game without the need for app store intermediaries. This strategy could result in increased profitability for both companies involved.
NEXON's partnership with Tencent and the latter's strategic adjustments are significant in the context of the gaming industry. The company's standing as a top pick by the analyst is reinforced by the potential financial benefits arising from Tencent's recent actions.
The maintained Buy rating and stock price target reflect a positive outlook for NEXON's stock performance, as the company continues to capitalize on its partnership with Tencent and the evolving distribution strategies in the gaming market.
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