Increased competition and slowing sales have led some investors to avoid the gaming industry in recent months. However, lower prices could represent strong buying opportunities for investors who want to diversify and aren’t afraid of risk.
Here’s what’s happening with the top three gaming stocks on the NASDAQ.
Gaming: Electronic Arts Inc. (NASDAQ: EA)
EA is one of the largest video Gaming publishers and developers in the world, with yearly revenue exceeding $5 billion. Despite often missing its own projections and analyst expectations, the company has still grown revenue by significant amounts over the last five fiscal years.
EA’s stock dipped this year, due to weaker than expected sales, but prices are now recovering thanks to impressive performance from new gaming title “Apex Legends”. This is a free to play game that is monetized through microtransactions. Investors are excited as EA has revealed that the game attracted 25 million players in its first week.
EA stock has increased 5.01% in five days, thanks to optimism for its new title. So far this year, stock price is up 23.23%
Take-Two Interactive (NASDAQ: TTWO)
Take-Two is another top publisher and developer. It owns properties like Grand Theft Auto and Red Dead Redemption – both of which are highly regarded by gaming critics as well as players.
With the release of Red Dead Redemption 2 in the holiday quarter, Take-Two increased revenue to $1.25 billion, compared to $480 million in the previous year. The company now projects revenue between $2.66 billion and $2.71 billion for FY19, compared to a total of $1.79 billion for FY18.
This company has sustainability and some of the highest selling intellectual properties in the industry. Lower prices today (TTWO is down -9.23% YTD) could be the perfect buy-in for investors who don’t mind the highly cyclical nature of the industry.
Activision Blizzard Inc. (NASDAQ: ATVI)
Activision’s revenue has exceeded $7 billion in the last two fiscal years, but investors still want more growth. While analysts believe that the stock is overperforming, recent selloffs don’t suggest confidence from the wider market. Activision has lost -41.04% from its stock price in the last 12 months.
The company is now implementing a restructuring plan and will announce hundreds of job cuts as it aims to increase efficiency and focus on its most profitable game franchises. This move could pay off for the company and stock may ultimately recover.
As with all stocks, the top gaming stocks carry some risk. The key for investors is to understand that headlines don’t always reflect underlying company stability and performance potential. Lower prices today could allow for affordable investments during the dip.
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