Cave Interactive Co., Ltd. (3760) AI Stock Analysis

• Market Cap: ¥4.28B
• Dividend Yield: 1.44%
• Average Volume (3M): 26.20K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.73
• Revenue Growth: 4.29%
• EPS Growth: -123.59%
• Country: JP
• Employees: 171
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): N/A
• Shares Outstanding: 6,693,500
• 10 Day Avg. Volume: 43,080
• 30 Day Avg. Volume: 26,200
• PEG Ratio: -0.31
• Price to Book (P/B): 1.05
• Price to Sales (P/S): 0.47
• P/FCF Ratio: -25.35
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 49 Neutral
• Price Target: ¥641.00 ▼(-12.67% Downside)
• Action: Reiterated Date: 10/15/25
• Date: Action: Reiterated 10/15/25

The overall stock score is primarily impacted by the company's strong revenue growth but is weighed down by profitability and cash flow challenges. Technical indicators suggest bearish momentum, and valuation metrics indicate potential overvaluation.

Positive Factors

Owned IP and Live-ops F2P Model

Cave's ownership of niche "bullet hell" IP and vertical integration of development plus live-ops supports durable monetization. Reusing recognizable IP lowers content acquisition costs, while ongoing events and updates drive recurring in-app purchase revenue and player retention over quarters.

Low Leverage / Stable Balance Sheet

A low debt load and strong equity ratio provide financial flexibility to fund new game development, marketing, and live-ops without forcing dilutive financing. This stability helps the company withstand cyclical hits in player spending and invest for multi-quarter product roadmaps.

Historical Revenue Momentum

Sustained revenue growth signals product-market fit and effective monetization of titles and IP collaborations. A growing top line increases optionality to scale live operations, invest in new content, and amortize fixed development costs over a larger revenue base.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow constrains the firm's ability to self-fund game development and marketing, increases reliance on external capital or licensing deals, and raises execution risk for multi-quarter production cycles and sustained live-ops investment.

Declining Return on Equity

A falling ROE suggests capital is generating lower returns, which may reflect weaker monetization or inefficient reinvestment. Over months this can limit investor confidence and the company's ability to finance growth internally without compromising shareholder value.

Inconsistent & Falling Profitability Margins

Declining gross and net margins point to rising content, user-acquisition, or operating costs and weaker pricing power. If margins remain pressured, long-term free cash flow and capacity to support recurring live-ops or new title launches will be materially constrained.

Cave Interactive Co., Ltd. Business Overview & Revenue Model

Company Description

CAVE Interactive CO.,LTD. engages in entertainment business in Japan. It plans, produces, operates, and markets entertainment content, including mobile media. The company also offers games and live streaming services. CAVE Interactive CO.,LTD. was incorporated in 1994 and is based in Tokyo, Japan.

How the Company Makes Money

Cave Interactive mainly generates revenue from the operation of mobile games through free-to-play monetization, where users download and play for free and a portion of users purchase digital items and advantages via in-app purchases (e.g., gacha/lottery-style draws, character or equipment upgrades, consumable items, and paid currency). Ongoing live operations—limited-time events, new content releases, balance adjustments, and promotional campaigns—are used to sustain engagement and drive repeat spending. The company also earns from licensing and IP-related income by utilizing its own game IPs in collaborations and other commercial uses; specific partner names and the quantitative breakdown of these revenue streams are null.

Cave Interactive Co., Ltd. Financial Statement Overview

Summary

Cave Interactive Co., Ltd. shows strong revenue growth but faces challenges in profitability and cash flow management. The balance sheet is stable with low leverage, but declining return on equity and negative free cash flow are concerns.

Income Statement

Cave Interactive Co., Ltd. has shown significant revenue growth over the years, particularly in the most recent periods, indicating a strong upward trajectory. However, the company's profitability margins, such as the net profit margin and EBIT margin, have been inconsistent, with recent declines. The gross profit margin has also decreased, suggesting potential cost management issues.

Balance Sheet

The company's balance sheet reflects a stable financial position with a manageable debt-to-equity ratio, indicating low leverage. However, the return on equity has decreased significantly, pointing to reduced efficiency in generating returns for shareholders. The equity ratio remains strong, suggesting a solid capital structure.

Cash Flow

Cash flow analysis reveals challenges, with negative free cash flow and a declining free cash flow growth rate. The operating cash flow to net income ratio is positive but relatively low, indicating potential issues in converting income into cash. The free cash flow to net income ratio is negative, highlighting cash flow management concerns.

Breakdown	TTM	May 2024	May 2023	May 2022	May 2021	May 2020
Income Statement
Total Revenue	13.62B	13.97B	12.27B	6.96B	1.41B	1.70B
Gross Profit	4.59B	5.23B	5.45B	3.44B	677.71M	793.74M
EBITDA	781.83M	55.80M	2.13B	2.97B	-901.39M	-234.60M
Net Income	-409.23M	246.49M	1.48B	2.58B	-936.99M	-244.97M
Balance Sheet
Total Assets	11.48B	13.25B	14.36B	13.49B	1.38B	1.42B
Cash, Cash Equivalents and Short-Term Investments	4.26B	6.20B	6.34B	6.39B	1.06B	904.44M
Total Debt	1.21B	1.25B	983.92M	1.10B	206.51M	209.72M
Total Liabilities	5.55B	6.98B	7.57B	8.40B	361.06M	359.27M
Stockholders Equity	5.92B	6.22B	6.09B	4.42B	997.56M	1.03B
Cash Flow
Free Cash Flow	0.00	-257.72M	-916.03M	1.68B	-520.33M	-485.48M
Operating Cash Flow	0.00	922.45M	569.09M	2.54B	-480.60M	-299.32M
Investing Cash Flow	0.00	-1.35B	-703.00M	1.28B	44.29M	-186.16M
Financing Cash Flow	0.00	279.65M	31.00M	1.85B	583.50M	287.31M

Cave Interactive Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 734.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3760, the sentiment is Negative. The current price of 734 is above the 20-day moving average (MA) of 657.80, above the 50-day MA of 680.64, and below the 200-day MA of 849.61, indicating a bearish trend. The MACD of -12.32 indicates Positive momentum. The RSI at 43.02 is Neutral, neither overbought nor oversold. The STOCH value of 55.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3760.

Cave Interactive Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3911	62 Neutral	¥9.81B	9.63	―	―	11.15%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3656	52 Neutral	¥31.50B	-5.14	―	―	-14.71%	-38.87%
3851	51 Neutral	¥4.27B	16.91	―	0.64%	-13.35%	-258.79%
3760	49 Neutral	¥4.28B	-0.41	―	1.44%	4.29%	-123.59%
3903	46 Neutral	¥18.60B	52.94	―	―	-37.68%	―
3793	42 Neutral	¥11.70B	4.66	―	―	93.85%	-216.24%