By Kwanwoo Jun

Tencent Holdings-backed videogame maker Krafton Inc.'s shares sank Friday after posting weaker-than-expected quarterly earnings a day earlier.

Shares in the South Korean developer of the survival shooter game "PlayerUnknown's Battlegrounds," also known as PUBG, plunged 13% to 259,500 won ($216.29) each in early trade, underperforming the benchmark Kospi that edged 0.3% lower. That marked its lowest stock-price level since the company listed on Aug. 10, 2021.

The selloff of Krafton shares followed the company's disappointing earnings released after Thursday's market close that operating profit and net profit slumped 53% and 85%, respectively, on year for the October-December period.

The company attributed the below-consensus quarterly results to the weaker-than-expected performance of "PUBG: New State," a new game launched in November.

Higher marketing and labor costs also weighed on the quarterly earnings, the company said.

Seoul-based NH Investment & Securities cut the stock's target by 21% to KRW450,000 after the weak quarterly earnings, though it keeps a buy rating, citing the company's plan to update the game in April and release new games to boost gamer traffic and revenue growth.

Some analysts say Krafton depends too heavily on PUBG to generate its revenue and earnings growth.

Image Frame Investment HK Ltd. is Krafton's second-largest shareholder, with a 13.57% stake. Image Frame Investment HK is owned by Tencent Holdings Ltd.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

02-10-22 2355ET