I have read a lot of material on various websites on Frontier. I thought I would put down my thoughts in the following. Of course do your own research and the following is not investment advice.

The issue that has particular bemused me is that a lot of commentary seems to be based on 'it has gone up so it must go down' rather than any true understanding or analysis. The nearest a lot of commentary has come is 'oh, look what happened to Eidos'.

(1) This is not your mother's EIDOS
There is some coverage in the UK press comparing Frontier to EIDOS. Clearly the latter was a high profile UK gaming company that fell to earth. The issue with a reference point of one is precisely that - you have a reference point of one.

I think fairer current comparators are Electronic Arts, Activision Blizzard, Take Two Interactive, Ubisoft and Tencent. (And CD Projekt - a Polish company).

(2) This is not a fly-by-night one hit wonder.
There is limited understanding by some of the coverage on the background of Frontier. The company has been writing computer games since the year dot (actually since the original Elite on the BBC Micro in the 1980s). Historically it was a studio for hire - i.e. big 'publishers' such as Microsoft or Atari (remember them?) paid Frontier to write games. As Frontier did not put up any capital it was paid for service (i.e. development) and some small share of the profits.

The key point of this is that the company has been behind a number of 'hits' in the past where the 'IP' was owned by others (e.g. Kinectimals, RollerCoaster Tycoon 3 etc).

The launch of Elite Dangerous was the company's 'breakthrough' into self-publishing. This is no different from a musician or an actor deciding they are going to produce their own album or film. There is an upfront cost but the pay off profile is significantly different. (The Kickstarter campaign derisked the game for the company - and this attitude of derisking projects is extremely important to understand).

An interesting aside that has received limited attention is that Frontier has managed to buy back the IP on some of the games it developed for others through its purchase of some of the Atari…

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