Over the last five trading sessions, video game stocks have reported mixed trends. While some stocks soared up given earnings results, some fell flat for the same reason.
Major news highlights over the past week mostly include earnings results of some of the top players in the industry like Activision Blizzard, Inc. (ATVI), Zynga, Inc. (ZNGA) and NetEase, Inc. (NTES).
Top Stories Over the Last Week
1. Activision Blizzard reported its fourth quarter earnings, which comfortably beat the Zacks Consensus Estimate and increased significantly year over year. While the company’s revenue remained down year over year, popular franchises Call of Duty: Advanced Warfare, Destiny, and Skylanders: Trap Team registered significant demand securing positions in the top five best-selling new releases list of 2014. (Read more: Activision (ATVI) Beats Q4 Earnings; Revenues Decline Y/Y)
2. Another video game retailer, Pandora Inc. (P), recently reported fourth quarter and full-year 2014 results. The company posted fourth quarter earnings of 6 cents per share, missing the Zacks Consensus Estimate of 9 cents, but improved from the prior-year quarter’s figure of 4 cents a share. The company shares plummeted more than 22% in the after-market trading session following the release. (Read more: Pandora's Q4 Numbers Belie Opportunity In Music Streaming)
3. Leading game developer Zynga reported its fourth quarter financial results. While the company’s loss per share remained in line with the Zacks Consensus Estimate its revenue remain below expectation, which resulted in significant decline in its stock prices. (Read More: Zynga (ZNGA) Crashes 10% on Revenue Miss, Key Q4 Earnings Stats to Know)
4. King Digital Entertainment plc (KING) also reported its fourth quarter earnings, which surpassed the Street consensus. The company’s strong performance of franchise games in the fourth quarter that led to top-line growth. (Read more: King Digital "Candy Crushes" Q4 Earnings, Stock Up 20% After Hours)
5. China-based video game maker NetEase also reported its fourth quarter results, wherein the company’s earnings fell below market expectations while revenues surpassed and also grew year over year. The top line growth remained significantly driven by online game service revenue, up 35.7% year over year.
Performance
The following table shows the price movements of the major video game companies over both the past five trading days as well as the last six months:
|
Company |
Last 5 Days |
Last 6 Months |
|
ATVI |
3.75% |
-3.07% |
|
EA |
-0.34% |
58.62% |
|
GLUU |
-1.58% |
-8.33% |
|
MSFT |
1.60% |
-1.33% |
|
NTES |
1.65% |
36.10% |
|
TTWO |
-4.69% |
36.06% |
|
ZNGA |
-2.92% |
-4.20% |
Over the last 5 days, company that gained the maximum was Activision with 3.8% hike in stock prices. We believe the growth remained propelled by the company’s earnings performance. On the other hand, the company that lost the maximum was Take-Two Interactive Software Inc. (TTWO) Interactive with 4.7% decline in share prices.
Despite reporting a strong fourth quarter, the stocks currently remain trending downward. We believe the recent declines represent a correction in stock prices as Take-Two continues to trade near the higher end of its 52-week range.
Over the six-month period, Electronic Arts Inc. (EA) surged the most — nearly 58.6%. The stock rallied almost 13% in a day’s trading post its stellar third-quarter 2015 earnings results.
We believe that continued growth in the company’s mobile gaming audience makes it one of the most consistently performing video game makers in the current times. In addition, strategic collaborations with companies like Google, Apple, Facebook in developing its gaming platform will further add to its bottom-line growth over the long-term.
Over the six-month period, the stock that lost the most over this time period is Glu Mobile, Inc. (GLUU) with an 8.3% price drop.
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