At the end of March 2013, the Games Workshop (LSE: GAW) share price was 634p. As I write, it is 9,526p. It has risen by 1,402% in a decade. A £1,000 investment (technically £1,001.72 to get a whole number of shares) back then would have bought 158 shares in the hobby miniatures company whose major brands are Warhammer and Warhammer 40,000.
Those shares would be worth £15,051 now, for a total gain of £14,049. I think numbers like that demonstrate the value of long-term investing quite clearly.
The decision to buy
I didn’t buy Games Workshop shares a decade ago. I was not investing back then. I didn’t buy them after 50% was wiped off their value during the March 2020 coronavirus market crash. They went on to rise 245% to hit an all-time high in September 2021.
By this point, I was following the company, and I liked it. It was booming as people turned to gaming of all varieties to escape the tedium of lockdowns. But, with a price-to-earnings (P/E) ratio well over 30, I thought the stock was pricey.
Then came an opportunity. The markets turned on growth stocks and pandemic winners towards the end of 2021. By October 2022, Games Workshop shares were down 50% from their all-time highs. In November 2022, I bought, when the P/E ratio was back under 20.
I did struggle to decide to buy. I couldn’t help but look back at the price history and think that perhaps most of the gains had already been had. But, I ultimately ignored the price chart. Instead, I asked a few key questions of the company.
Games master
The first question was whether Games Workshop was well-run. I thought that it was and still do. Its management has always had a clear and simple strategic plan. They take ownership of mistakes instead of blaming external factors for everything. And, looking at the company’s impressive long-term revenue growth and profitability suggests they know what they are doing.
The second question was whether the company would be larger in 10 years. Again, I answered yes. Social media has helped to build wide-reaching communities around its core business of fantasy miniatures. Amazon has signed a deal to make TV shows and movies based on the company’s intellectual property. The long-term plan of getting a triple-A Warhammer video game made has probably become more likely as a result.
I thought the prospects for Games Workshop looked good in the long term. So, I bought and put those lingering fears about the stock’s price history to one side.
Games Workshop share price
So far my purchase is doing well. Hopefully, that continues. Do I expect a 1,400% return over the next 10 years? That would be nice, but no. In truth, I have no idea where the Games Workshop share price will end up.
My assessment of the company’s potential might be wrong. Things could change and I am prepared to review and reconsider as the months and years pass by. But for now, and indeed when I bought the stock five months ago, I do have confidence that its price will be higher in the long term than it is now.
