What Is Drawing Fresh Attention To Paradox Interactive (OM:PDX)?
Paradox Interactive (OM:PDX) is back in focus after its 6 August 2026 earnings report, with Q2 sales of SEK 524 million and net income of SEK 149 million shaping how investors reassess the stock.
See our latest analysis for Paradox Interactive.
At a share price of SEK135.3, Paradox Interactive has seen a 1-day share price return of 1.96% and a 30-day share price return of 2.50%. However, the year-to-date share price return is down 13.88% and the 3-year total shareholder return has declined 50.25%, which suggests investors are still reassessing the stock after the Q2 earnings while longer term momentum has faded.
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Paradox Interactive is trading below both analyst targets and some intrinsic value estimates, even after the Q2 bump. The key issue now is to determine where fair value truly sits across that range of views.
Most Popular Narrative: 12.4% Undervalued
Paradox Interactive's most followed valuation narrative puts fair value at SEK154.4, which is above the last close of SEK135.3 and frames the stock as undervalued on that basis.
Paradox Interactive Future Earnings and Revenue Growth Assumptions
How have these above catalysts been quantified?
• Analysts are assuming Paradox Interactive's revenue will grow by 4.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.1% today to 42.3% in 3 years time.
Want to see what kind of earnings profile could justify that gap between price and fair value? The narrative leans heavily on higher margins and steady revenue compounding, and it examines how those ingredients combine into a single valuation number.
The narrative uses a 6.83% discount rate to bring those future cash flows back to today. It also assumes Paradox Interactive earns a much higher return on equity in a few years than it does now and keeps its share count stable while doing it. Analysts in that narrative still land on a future earnings multiple below what they currently ascribe to the wider Swedish entertainment space, which is an important part of how they arrive at SEK154.4.
Result: Fair Value of SEK154.4 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Paradox Interactive still faces two key risks that could derail this optimism: weaker-than-expected major releases, and ongoing pressure from rising development and project costs.
Find out about the key risks to this Paradox Interactive narrative.
Another View: Paradox Interactive Through the P/E Lens
The DCF narrative for Paradox Interactive suggests upside, yet the current P/E ratio of 113x tells a very different story. It is much higher than the European Entertainment industry at 15x, the peer group at 38.1x, and even the fair ratio of 39x. This points to meaningful valuation risk if expectations slip.
When a stock trades at a multiple that far above both peers and a fair ratio the market could move towards, even small disappointments in execution or forecast assumptions can have an outsized impact on the share price. The key question is whether you think Paradox Interactive can deliver enough future earnings to keep that gap from closing the hard way.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Given the mix of optimism and concern around Paradox Interactive, it makes sense to review the full picture yourself and move quickly while sentiment is still shifting. A helpful place to start is by weighing up the 2 key rewards and 3 important warning signs.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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