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

• Market Cap: ¥4.22B
• Dividend Yield: 1.44%
• Average Volume (3M): 26.20K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.74
• Revenue Growth: 4.29%
• EPS Growth: -123.59%
• Country: JP
• Employees: 171
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): -468.20
• Shares Outstanding: 6,693,500
• 10 Day Avg. Volume: 43,080
• 30 Day Avg. Volume: 26,200
• PEG Ratio: -0.29
• Price to Book (P/B): 0.96
• Price to Sales (P/S): 0.43
• P/FCF Ratio: 7.24
• 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: ¥632.00 ▼(-13.90% 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

Legacy IP & Niche Genre

Owning and reusing recognizable arcade/console IPs in a focused 'bullet hell' niche provides durable competitive moats: loyal fans, lower user acquisition costs versus new IPs, and higher conversion on nostalgia-driven monetization across multiple releases and collaborations.

Stable Balance Sheet / Low Leverage

Low leverage and a strong equity ratio give the company financial flexibility to fund game development, live-ops, and marketing without immediate refinancing. This resilience supports multi-quarter investment cycles and lowers bankruptcy or distress risk during downturns.

Recurring Free-to-Play Monetization

A proven free-to-play and live-ops model generates recurring, event-driven revenue streams and high-margin digital sales. Sustained engagement via updates and gacha mechanics supports repeat spending, enabling predictable lifecycle monetization across title portfolios.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow and deteriorating FCF growth constrain internal funding for new titles and live-ops, increasing reliance on financing or equity. Over months this can limit content cadence, slow user retention initiatives, and pressure strategic investments.

Inconsistent & Declining Margins

Worsening and inconsistent gross and net margins suggest cost pressure or lower monetization efficiency. Over the medium term this undermines the sustainability of profits from expanding revenue, requiring margin improvement or cost control to restore durable profitability.

Declining Return on Equity

A materially lower ROE signals the company is generating less return from shareholder capital. Sustained ROE decline can erode investor returns and indicates operational or allocation inefficiencies that may persist absent strategy shifts or productivity gains.

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	13.63B	13.97B	12.27B	6.96B	1.41B	1.70B
Gross Profit	4.59B	5.23B	5.37B	3.44B	677.71M	793.74M
EBITDA	695.75M	1.41B	2.20B	260.29M	-779.99M	-217.50M
Net Income	-409.08M	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	1.59B	1.10B	206.51M	209.72M
Total Liabilities	5.55B	6.98B	7.57B	8.40B	361.06M	359.27M
Stockholders Equity	5.93B	6.22B	6.09B	4.42B	997.56M	1.03B
Cash Flow
Free Cash Flow	0.00	827.63M	477.74M	2.46B	-485.49M	-308.81M
Operating Cash Flow	0.00	922.45M	569.09M	2.54B	-480.60M	-299.32M
Investing Cash Flow	0.00	-1.14B	-657.82M	1.28B	44.29M	-186.16M
Financing Cash Flow	0.00	69.58M	-14.33M	1.52B	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: Negative
• 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 650.90, above the 50-day MA of 672.16, and below the 200-day MA of 842.86, indicating a bearish trend. The MACD of -9.86 indicates Negative momentum. The RSI at 39.94 is Neutral, neither overbought nor oversold. The STOCH value of 75.93 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	¥9.57B	9.63	―	―	11.15%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3656	52 Neutral	¥29.86B	-95.92	―	―	-14.71%	-38.87%
3851	51 Neutral	¥4.30B	16.91	―	0.64%	-13.35%	-258.79%
3760	49 Neutral	¥4.22B	-0.41	―	1.44%	4.29%	-123.59%
3903	46 Neutral	¥17.21B	9.33	―	―	-37.68%	―
3793	42 Neutral	¥11.62B	4.66	―	―	93.85%	-216.24%