CD Projekt Red (CDR): Video Game Stock Ready To Breakout

It’s that time again! Once a week I pull breakout alerts from our premium Breakout Alerts service. Members of the service receive 6-8 potential breakout opportunities each week.

This week we’ve got a play on the video game industry. We documented the rise of E-Sports in last month’s Consilience Report and outlined the bull case for this company.

That company is CD Projekt Red (CDR). CDR’s a polish video game producer. They’re the team that produced the mega-successful Witcher series (yes, that Witcher).

Here’s the bull thesis: CDR’s coming off a historical year for sales and profitability. The company will use this momentum to further bolster its line-up of gaming IP while investing in its most popular series’ like The Witcher (over 50M copies sold). The company’s net cash balance sheet is strong enough to withstand the boom-bust cycle of new game releases. CDR boasts extreme operating leverage, which we believe will continue over the next five years. Short-term catalyst includes release of CyberPunk 2077.

Breakout Formation: Rectangle Chart Pattern Above 50MA

Trade Parameters: 

  • 3% Entry: $429.92
  • 1.50% Entry: $423.66
  • Stop-Loss: $390.3
  • Profit Target: $481.80
  • Reward/Risk: 1.74x

Business Description

CD Projekt S.A., through its subsidiaries, engages in the development and digital distribution of video games worldwide. It operates through two segments, CD PROJEKT RED and 

The company’s product portfolio comprises The Witcher; The Witcher 2: Assassins of Kings; The Witcher 3: Wild Hunt, Hearts of Stone games, and Blood and Wine; Thronebreaker: The Witcher Tales; Gwent: The Witcher Card game; and Cyberpunk 2077, as well as online multiplayer games. –


  • Market Cap: $10.1B
  • Enterprise Value: $9.93B
  • Gross Margins: 70%
  • Operating Margins: 37.5%
  • EV/EBIT: 17.05x
  • P/FCF: 20x

What We Like:

  • Leading video game creator with crazy-sticky fanbase
  • Consistent high-quality games
  • Negative cash conversion cycle
  • No debt
  • Insiders own >20% 
  • High FCF generation

What We Don’t Like:

  • Boom/bust video game cycle

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

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He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

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He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

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