Gravity ($GRVY) Q3 Preview: Good Quarter, Strong Pipeline, Market's AFK

Q3 Looks Strong, Q4 & 2026 Looks Busy. Valuation? Still Makes No Sense.

Data-driven insights on the mobile app economy, ahead of earnings: AppInvestor tracks mobile app through real-time store data (App Store, Play Store), identifies trends with AI models, and analyzes financials.

Executive summary

It’s been a year since our last full write-up on Gravity, and tomorrow (Nov 7) they’ll report Q3 earnings.

• We estimate Q3 revenue landed between USD 95 million and 105 million, behind the strong Q2 and ahead of Q1.

• The stock still trades around its cash balance, implying an enterprise value close to zero, even as 2025 launches expand the Ragnarok universe across every region and platform.

• In short: operations are humming, valuation remains ridiculous as we will show even discounting cash entirely, and Q4 and 2026 is shaping up to be extremely busy for Gravity

Be sure to comment on the post: always happy to discuss our research.

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A quick refresher on Gravity

Gravity is a NASDAQ-traded, South-Korean video-game company best known for Ragnarok Online, the early-2000s MMO that defined a generation of PC gamers worldwide, and especially in Asia. The company which owns the exclusive rights to the Ragnarok IP until 2033 (and will secure it beyond), has spent the last decade modernizing it for mobile and cross-platform play.

Since 2017 Gravity has successfully pivoted from a single PC title to a mobile-first publisher, often working with external studios in China and Southeast Asia while keeping creative and licensing control in Seoul. This strategy has allowed them to post a seven-year CAGR around 20 %, proving that a company built on one franchise can still deliver multi-title diversification if it executes well.

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Why we invested

We first bought shares back in 2019, riding the Korean launch of Ragnarok Origin, and sold most of it during the COVID gaming boom when the stock rocketed past USD 150. We came back in October 2022 when the market stopped paying attention, even as Ragnarok Origin exploded in Taiwan. The stock was in the low 40s, sentiment was dead, meanwhile operations were booming.

Cf chart below, stock kept going down in the fall 2022 whilst our tool identified earning increase (green) based on app rankings. This translated in actuals with Q4 2022 up 70% QoQ in revenue.

Since then, Gravity has become a cash-printing machine. Every time they launch a new Ragnarok mobile RPG in Asia, it lands somewhere in the top-20 grossing charts. The stock has done fine, but nowhere near as fine as the business itself. That gap is exactly why we’re still here.

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Understanding Gravity’s business, briefly

Let’s look at 2024 numbers, purely to give an overview of the business operations. Gravity generated roughly USD 350 million in revenue with a 39 % gross margin and a 17 % net margin. About 80 % of that revenue came from mobile games, 15 % from PC, and the rest from licensing and services.

Their core market is Asia, with Taiwan, Thailand, the Philippines, and Korea together representing about 57 % of sales.

That’s a broad base for a company people still call a “one-hit wonder.” The truth is that their IP Ragnarok has become a platform with multiple live titles, each cycling through its own launch and maturity curve. For example, in 2024:

Source: 2024 SEC 20-F Form

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Q3 2025: solid quarter ahead

Now to what matters. After a Q2 that was only beaten by the 2023 era of Ragnarok Origin successes, Q3 will likely be another strong revenue quarter, though a bit off the Q2 high. We estimate:

• Revenue between USD 95 million and 105 million, which would be down slightly quarter-on-quarter but up from Q1.

• Net income between USD 11 million and USD 14 million, depending on their marketing efforts for upcoming launches.

Revenue and profitability per quarter compared to market cap (not EV). Q3 2025 is an estimate.

The drivers are clear:

• Ragnarok M: Classic dominated the first half of the year. After its April launch in Taiwan / Hong Kong / Macau, it kept charting well into early Q3 (but did fall off since). The global release on September 3 added another short-term boost through September.

• Ragnarok X: Next Generation kept performing in its new global markets after the May rollout across the Americas (especially Brazil) and Europe. This is the biggest surprise on our books, and one that bodes well for the future.

• Ragnarok Twilight, launched July 3 in Taiwan and August 15 in China added fresh momentum mid-quarter. It’s an idle MMORPG, which means easier to maintain, potentially longer-tailed.

• Smaller titles like Ragnarok Idle Adventure in Korea filled the rest.

Altogether, that mix supports our Q3 revenue range, implying continued profitability and more evidence that Gravity is not a single-hit story.

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Q4 2025: the busiest quarter in years

Q4 is where things get even more interesting. Based on our live data calculations for Q4, Twilight is already leading the pack with TW/HK and since 2 weeks the SEA release:

Note: “M: Eternal Love” in the above chart also includes M: Classic SEA. It’s an issue with our source data.

The details:

• Ragnarok Twilight officially launched in Southeast Asia on October 23, landing top-ten in Thailand and the Philippines within days. If engagement holds through December, this title could carry revenue well into 2026.

• Ragnarok: The New World, a cross-platform MMORPG where players build and develop their own islands, is expected to launch in Taiwan / Hong Kong / Macau this quarter. Early materials suggest a higher level of internal development, which should improve margins.

• Then comes Project Abyss, the large-scale action RPG scheduled for Southeast Asia later in Q4. Gameplay previews looked rough around the edges, so we wouldn’t be shocked if it slips, but the concept is ambitious.

• Ragnarok: The Promised Adventure was launched September 2025 in China. It’s available through WeChat and Tiktok Mini Games, not yet on iOS, so hard to gage its impact.

• Meanwhile Ragnarok Next Generation will finish rolling out across continental Europe by late November, expanding the brand footprint even if the revenue impact is modest.

• To top it, no less than 5 indie PC/Console games and 1 indie mobile game planned for global release in Q4. Throwing spaghettis at the wall here, time will tell if one sticks.

Overall roadmap as presented in Q2:

Whether Q4 outpaces Q3 likely depends on when Ragnarok: The New World is launched in Taiwan, their highest grossing market.

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Looking into 2026

Next year is shaping like a momentous year for Gravity. The company is likely to keep its current strategy:

• Launching more Ragnarok IP games, in-house and externally-developed

• Expand globally: given the success of X: Next Gen abroad, they have a real shot at growing their user base drastically

• Indie games publishing, whereby they get an opportunity to license or even buy talented teams/studios early on

What sets 2026 apart is the conversation shifts toward two flagship projects:

• Ragnarok Online 3 (PC and Mobile) is Gravity’s big internal development effort, expected around mid-2026, already generating buzz with a teaser that drew over 1.5 million views in the first 4 days.

• Ragnarok M: Eternal Love 2, developed by Big Cat Studio, is another major bet: an open-world RPG clearly inspired by Genshin Impact. Given Eternal Love 1 has been their first major worldwide mobile success, it is bound to attract interest.

Both will remind investors how wide this IP can stretch when given production budget and time.

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Valuation: still absurdly cheap

At current prices around USD 58 per share, Gravity’s market capitalization sits near USD 402 million. As of the last quarter, the company held over USD 400 million in cash and short-term investments (using today’s rate, KRW crashed vs the USD in past few months) and carries essentially no debt. That means the enterprise value (the company’s market value minus its cash) is close-to-zero or negative. In simple terms, the market considers Gravity’s operations as worthless. After 8 years at 20% CAGR and 15-20% net profitability on average. Worthless. Let that sink in.

No better way to visualize this than looking at EV vs Market Cap. Where that red go?

Let’s be incredibly conservative, and pretend the cash doesn’t even exist, and that they cannot do anything with it. If we value it purely on earnings, it remains cheap. Using Q2 TTM, we get roughly market cap = 1× sales and about 5.6× EBITDA, while most comparable Asian publishers trade anywhere from 1½× to 3× sales and 10× EBITDA.

A quick glimpse at the P/E over time shows you that investors lack of love for Gravity is not new:

So why the discount?

It’s not about performance, what worries investors is likely rather:

• Cash allocation: No dividends, stock buyback, Gravity is the incarnation of Scrooge McDuck. It’s fair to say they are overly conservative, and even if they are heavily investing in growth, they sit on too much cash.

• Control: GungHo, Gravity’s 59 % shareholder, has historically kept a conservative approach to cash returns. An activist fund in Japan is now pressing GungHo’s board for better capital allocation, but until that translates into buybacks or dividends at Gravity, the cash will keep piling up faster than the stock price.

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Why we think the market is wrong

The idea that Gravity is a “one-IP wonder” ignores the reality that the Ragnarok universe now spans a dozen live titles across every major Asian market, with several more on the way. These games may share a name, but each new release adds incremental users, regions, and monetization models. The company’s ability to keep launching more and more profitable titles every year while maintaining a 15–20 % net margin is rare in this industry.

Combine that with a cash fortress, no debt, and a deepening release pipeline, and the risk–reward here is, in our opinion, remarkably asymmetric.

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Conclusion

Gravity enters Q4 2025 with momentum and one of the richest launch schedules in its history. Q3 should confirm another profitable quarter with revenue around USD 95–105 million, and Q4 has multiple shots on goal. Yet the market still values the company as if it were on the verge of decline.

We don’t see it that way. We see a consistently profitable, cash-heavy publisher trading below liquidation value, with new titles rolling out almost monthly and two major projects on the 2026 horizon. Even more than that, we are impressed by their ability to grow through diversified games without a “major” hit like Ragnarok Origin. This part of the story is underrated.

We continue to hold our shares and add when the stock drifts into the sub-60 range. As long as Gravity keeps delivering new games and keeps the cash compounding, we’re happy to wait for the market to catch up. It usually does.

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Disclosure: We hold shares of Gravity Co. Ltd. ($GRVY). This article reflects our personal opinions, not investment advice.