Investors React to Ubisoft’s Tencent Partnership—A Game-Changer or Risky Bet?

Ubisoft’s stock had a rollercoaster ride on Friday, initially soaring 12% before tumbling into the red. The market’s reaction came after the French gaming giant announced its plans to spin off a new subsidiary housing three of its biggest franchises—Assassin’s Creed, Far Cry, and Rainbow Six—with Tencent investing €1.16 billion ($1.26 billion) for a 25% stake.

Market Jitters and Investor Reactions

While the move initially sparked optimism, shares reversed course in the afternoon, dropping as much as 6% before settling around 1% lower by 1451 GMT. According to Reuters, some U.S. hedge funds are shorting the stock due to Ubisoft only using €500 million from the deal to pay down its debt, which stood at €1.1 billion as of September.

Despite the market fluctuation, Barclays analysts believe that if the deal is finalized by the end of 2025, Ubisoft’s financial position will improve significantly. Meanwhile, Midcap Partners noted that the move highlights Ubisoft’s undervaluation, suggesting that it could streamline the rest of its business moving forward.

A Necessary Course Correction?

The decision to carve out a separate unit for its flagship franchises comes as Ubisoft tries to recover from a rough patch. The company saw its stock value nearly halved last year following disappointing financial results, declining sales, and game delays. Titles like Star Wars Outlaws underperformed, while Assassin’s Creed Shadows faced delays and controversy.

Erste analysts see the Tencent deal as a "strategic corrective move"—a way for Ubisoft to stabilize its future by securing long-term investment and focusing on evergreen game ecosystems.

What’s Next?

The deal still needs regulatory approval and is expected to be completed by late 2025. If successful, Ubisoft hopes this restructuring will put it back on solid ground, leveraging Tencent’s backing to drive its most valuable franchises forward while improving financial stability. Investors, however, remain cautious, watching how the company executes this transition in the coming months.