Should investors NOW load up on this cheap UK share that’s down 40%?

Trading at the beginning of the year has not been good Frontier Developments (LSE:FDEV) Share price history Down 40% in Monday’s trade at 601p per share, the cheap UK stock has run out after a disruptive trading update.

I have been thinking about investing in Frontier Developments stock for a long time. Is this the buying opportunity investors have been waiting for?

So what happened?

In its half-year update, Frontier said sales rose 16% in the six months to December.

Game developers and publishers say sales of internally developed titles released earlier in the current financial year have met expectations. Popular titles here are included Dangerous Elite and the first two titles in its Jurassic World Evolution franchise.

But here the good news ends. He noted that sales of the title fell below expectations during a major price promotion last month. It is also said that its sales F1 Manager 2022 (which was launched in August) performed poorly during the festive period as it witnessed “evidence of increased player price sensitivity“.

At AIM The business also said it is reviewing its strategy for third-party publishing Frontier Foundry. This is due to the division”mixed experience … financial success” starting to launch in 2019, as well as competitive market conditions.

The forecast was cut to 2024

Because of that pressure, Frontier doesn’t expect to meet brokerage forecasts. It has suggested revenues of £135m and operating profit of £19m in financial 2023.

It also says “number of variables and a more challenging economic outlook“It means business is now expecting sales”not less than £100m” this year. Frontier set a record turnover of £114m in the previous 12-month period.

Sales of around £100m will generate an operating margin of 2% and an operating profit of around £2m, Frontier said.

The company also lowered its profit estimates for financial 2024 and now expects growth of just 5%. We are told this represents “ccurrent market and portfolio uncertainty, and no new titles from Foundry” next year.

Time to invest?

As a UK stock investor, I am very excited about the rate at which the video game market will grow. Analysts at Grand View research, for example, expect the global leisure software market to be worth $584bn by 2030. That’s more than double that. $221bn was valued last year.

That’s why I bought a software service provider Keyword Studios in the spring of 2021. There are many other UK stocks that I am considering buying to exploit this opportunity as well.

However, after today’s news, I am not going to buy shares of Frontier Developments. The business has struggled to replace key titles. Strong competition in the gaming market means that sales of these titles may remain weak beyond the medium term. Uncertainty about Frontier Foundry’s future adds another layer of risk.

Frontier stock currently carries a forward price-to-earnings growth (PEG) ratio of just 0.1. But despite this cheapness, I’d rather find another UK tech stock to buy.