Games Workshop shares surge after positive trading update, driven by Warhammer sales

Shares in FTSE 250 listed Games Workshop leapt after the market opened, buoyed by a positive trading statement.

The stock of the business behind Warhammer surged nearly 14% in the initial trading session, following an upbeat announcement to investors this morning.

Games Workshop expressed contentment with its performance since the previous update in late September, reporting that it was "ahead of expectations", as reported by City AM.

It specified: "The Board's estimate of the results for the six months to 1 December 2024, at actual rates, is core revenue of not less than £260m, compared to £235.6m, in 2022/23."

Additionally, it expects "licensing revenue of not less than £30m", up from £13m recorded in 2023/24, and foresees a pre-tax profit "is estimated to be not less than £120 million, compared to £96.1m."

These projections follow a significant shareholder backlash prompted by hefty bonuses handed out to senior executives.

At its last trading update posted in September, the company headquartered in Nottingham faced substantial opposition at its AGM, with almost 21% dissenting against its remuneration report and close to 27% opposing its pay policy.

Back in July, leadership celebrated the company's record-breaking results, branding them as heralds of "exciting times" ahead.

In recent trading periods, Games Workshop's shares have risen 37.11% over the past half-year and 23% year-to-date.

Russ Mould, the investment director at AJ Bell, said: "Shares in fantasy miniatures outfit Games Workshop traded at record highs as the company revealed trading is running notably ahead of expectations for the first half of its financial year."

He highlighted a significant factor contributing to the robust figures: "A key feature of the strong numbers is a big uplift in licensing revenue driven by sales of the Space Marine 2 video game and before the company announces its half-year results in full in mid-January there may be news on its tie-up with Amazon. The agreement, to create a Warhammer 40K film and TV series, is close to a self-imposed deadline of 31 December to agree 'creative guidelines'.

"The beauty of licensing income is it comes with negligible extra cost for the company and therefore is highly profitable."

"Games Workshop looks to have significant untapped potential in its intellectual property and fantasy worlds. Globally, it has only just begun to explore market opportunities.

"Having staff passionate about games, painting and collecting miniatures is a bonus for its store network. Rather than simply being run by people who just show up to work and perform tasks as requested, the stores are manned by individuals as keen about the subject matter as the customers. That enthusiasm can be infectious and keeps customers loyal and the tills ringing.

"Being vertically integrated, Games Workshop controls everything from design to sales, allowing efficient cost optimisation and pricing control. It continues to be a unique business on the UK market and that has helped it attract a premium valuation."