Nazara Technologies' stock plunges 28%: Time to sell or buy?
What's the story
Nazara Technologies' shares have witnessed a major slump, falling by 12% in today's session. The decline comes after the Union Cabinet passed the Promotion and Regulation of Online Gaming Bill, 2025. By August 22 evening, it had secured President Droupadi Murmu's assent, officially becoming law. The legislation seeks to regulate online gaming platforms and bans real-money gaming (RMG), directly affecting Nazara's stake in Moonshine Technology (PokerBaazi).
Market reaction
Nazara's shares hit an intraday low of ₹1,014.75
The market has reacted sharply to the news, with Nazara's shares hitting an intraday low of ₹1,014.75 on the BSE. This marks a total decline of 27.6% over four trading sessions. The fall was further fueled by ICICI Securities downgrading the stock to 'Reduce' from 'Add,' and slashing its target price to ₹1,110 from ₹1,500 earlier due to regulatory concerns.
Legislative details
Legislation aims to address mental health, money laundering issues
The Online Gaming Bill seeks to tackle issues like mental health, money laundering, and fraudulent financial transactions in the gaming ecosystem. It introduces measures such as criminalizing digital betting, restricting monetary transactions for RMGs, and banning advertising/promotion of real-money games on media platforms. The framework also empowers MeitY to regulate illegal platforms and set up a national authority for competitive gaming promotion.
Investor apprehensions
Investor concerns over potential earnings impact
Nazara Technologies' exposure to the real-money gaming space through its stake in Moonshine Technology (PokerBaazi) has raised investor concerns. Although other verticals of the company such as gamified early learning, publishing, and esports remain unaffected, fears of an earnings impact have weighed heavily on the stock. With the stock falling below the revised brokerage target and regulatory uncertainty clouding the earnings outlook, investors are left with difficult choices.