Shift Up Corp., the South Korean game developer behind “Goddess of Victory: Nikke,” plans to raise up to 435 billion won ($313 million) from new share sales on the KOSPI bourse to bolster its gaming development strategy, guided by CEO Kim Hyung-tae and supported by Tencent.
Shift Up will sell 7,250,000 new shares in the public market, with the initial public offering (IPO) price range between 47,000 won and 60,000 won per share.
If priced at the high end, Shift Up’s market cap could reach 3.5 trillion won, making it the fourth-largest gaming company in Korea, following Krafton Inc., Netmarble Corp., and NCSOFT Corp. Analysts believe a successful IPO will positively impact other Korean gaming companies considering public listings later this year.
Shift Up plans to use the IPO proceeds primarily to develop new games, reinforcing its identity as an unrivaled game developer rather than acquiring existing intellectual properties (IPs). CEO Kim Hyung-tae, formerly a graphic designer at NCSOFT, emphasized this strategy during a press conference. Shift Up’s strength lies in developing high-quality games with top industry developers and designers.
Recent Successes and Future Prospects
Shift Up hired former OpenAI engineer Kim Tae-hoon a year ago to enhance its game artificial intelligence (AI) technology. Their latest title, “Stellar Blade,” sold over 1 million copies in two months since its April launch, topping sales charts in eight countries, including the US, UK, Canada, and Japan, generating 15.8 billion won in sales in May.
“Goddess of Victory: Nikke,” a third-person RPG shooting game launched in early 2022, remains popular, earning 15.5 billion won in sales last month alone. Nikke’s free-to-play model uses a gacha system for monetization, contributing to Shift Up’s diverse revenue stream.
Overvaluation Concerns
Despite these successes, some analysts worry about overvaluation. Based on a 39.25 times price-earnings ratio, Shift Up’s enterprise value compares to 35-41 times that of global peers like Square Enix, Cyberagent, and Kadokawa. This valuation approaches Krafton’s 43.8 times PER during its 2021 IPO, which was considered overpriced.
Shift Up, which debuted its first game, “Destiny Child” in 2016, was valued at around 2 trillion won last October when Tencent Holdings Ltd. acquired an additional 4 percent stake, making it the second-largest shareholder with 40.1 percent ownership, following CEO Kim’s 45 percent.
Shift Up’s value increased over 75 percent in the past six months due to record earnings. In 2023, it posted 111 billion won in operating profit, up 328 percent year-on-year, and 168.6 billion won in revenue, up 155 percent. In comparison, Japanese peer Square Enix earned 85.6 billion yen ($535.5 million) in the first quarter of this year alone.
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