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Videogame Stock Roundup: Earnings in Focus; Activision to Reportedly Build Overwatch E-sports League
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Earnings reports were in the limelight this week. Apart from that, reportedly, Activision Blizzard is planning an Overwatch e-sports league.
Recap of the Developments
1. Earnings:
Sohu.Com Inc. (SOHU - Free Report) : Sohu posted third quarter 2016 non-GAAP loss of $1.68 as against earnings of $1.27 per share in the prior-year quarter. Revenues in the quarter were down 21.4% to $410.6 million, primarily due to lower revenues from advertising and online gaming. Currency depreciation had a big role to play as per Sohu.Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) fell 13% to $262 million. Sohu carries a Zacks Rank #3 (Hold).
Changyou.com Ltd. : Changyou reported adjusted third-quarter 2016 earnings of 73 cents per share that topped the Zacks Consensus Estimate of 48 cents. The company reported revenues of $136 million, down 28.1% year over year. Online game revenues came in at $99 million, down 35% year over year. Online advertising revenues also declined 36% year over year to $12 million. Changyou.comcarries a Zacks Rank #3 (Hold).
Nintendo Co. Ltd. (NTDOY - Free Report) : Nintendo reported consolidated results for the six months ended Sep 30, 2016. Sales were significantly down to ¥136.8 billion as against ¥204.1 billion reported year over year. The company slashed its operating income guidance to ¥30 billion compared with ¥45 billion projected earlier.
The company added that Pokémon Go helped sales of its console 3DS. The company also made quite a few announcements. It plans to launch new games for 3DS namely Pokémon Sun/Moon in November and Super Mario Maker (a Wii U smash hit) in December. A revamped NES version with 30 in built games will be launched in November.
Last month, Nintendo collaborated with Apple Inc. (AAPL - Free Report) to bring its iconic character Mario the Plumber on the iOS platform in a new game titled Super Mario Run. Super Mario Run releases in December. Nintendo carries a Zacks Rank #2 (Buy).
2. Per media reports, Activision Blizzard is planning to create an e-sports league based on its latest franchise Overwatch. Activision CEO was quoted by media reports saying that viewership for e-sports surpasses that of NFL and NBA and as a result the company is working on monetizing this lucrative opportunity.
With continued increases in viewership as well as sponsorships and media coverage, e-sports is here to stay. Per research firm Newzoo, it is estimated that revenues from e-sports will grow 43% year over year to $463 million in 2016 and jump to $1.1 billion by 2019. To grab a share of this profitable opportunity, in October last year, Activision formed an exclusive e-sports unit spearheaded by former ESPN CEO Steve Bornstein.
In Jan 2016, the company acquired MLG, a leading e-sports player for an estimated $46 million. Founded in 2002, MLG is one of the biggest names in the e-sports arena. Activision has already established Call of Duty World League. Activision carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance
The following table shows the price movement 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
0.07%
27.20%
EA
0.16%
30.58%
GLUU
-1.47%
-26.91%
MSFT
4.71%
17.98%
NTES
2.17%
100.58%
TTWO
5.65%
28.86%
ZNGA
-2.46%
14.40%
Over the last five trading sessions, Take Two Interactive (TTWO - Free Report) was up 5.65% while Zynga was down 2.46%.
Over the last six-month period, NetEase (NTES - Free Report) surged the most (100.58%). NetEase has been in focus on reports that it will divest its news unit to focus on its gaming business. The increasing popularity of mobile-based games and the strength of PC games (licensed & self-developed) continue to keep investors interested in the stock. Moreover, growing mobile advertising revenues were an added incentive.
Glu Mobile was down 26.91% over the same time frame due to the underperformance of most of its releases. Also, the company lowered its guidance for 2016. But its significant share repurchase authorization and the much anticipated Taylor Swift game keep hopes alive. It recently purchased Poke Radar. Poke Radar is a community app built by Pokémon Go fans.
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Videogame Stock Roundup: Earnings in Focus; Activision to Reportedly Build Overwatch E-sports League
Earnings reports were in the limelight this week. Apart from that, reportedly, Activision Blizzard is planning an Overwatch e-sports league.
Recap of the Developments
1. Earnings:
Sohu.Com Inc. (SOHU - Free Report) : Sohu posted third quarter 2016 non-GAAP loss of $1.68 as against earnings of $1.27 per share in the prior-year quarter. Revenues in the quarter were down 21.4% to $410.6 million, primarily due to lower revenues from advertising and online gaming. Currency depreciation had a big role to play as per Sohu.Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) fell 13% to $262 million. Sohu carries a Zacks Rank #3 (Hold).
Changyou.com Ltd. : Changyou reported adjusted third-quarter 2016 earnings of 73 cents per share that topped the Zacks Consensus Estimate of 48 cents. The company reported revenues of $136 million, down 28.1% year over year. Online game revenues came in at $99 million, down 35% year over year. Online advertising revenues also declined 36% year over year to $12 million. Changyou.comcarries a Zacks Rank #3 (Hold).
Nintendo Co. Ltd. (NTDOY - Free Report) : Nintendo reported consolidated results for the six months ended Sep 30, 2016. Sales were significantly down to ¥136.8 billion as against ¥204.1 billion reported year over year. The company slashed its operating income guidance to ¥30 billion compared with ¥45 billion projected earlier.
The company added that Pokémon Go helped sales of its console 3DS. The company also made quite a few announcements. It plans to launch new games for 3DS namely Pokémon Sun/Moon in November and Super Mario Maker (a Wii U smash hit) in December. A revamped NES version with 30 in built games will be launched in November.
Last month, Nintendo collaborated with Apple Inc. (AAPL - Free Report) to bring its iconic character Mario the Plumber on the iOS platform in a new game titled Super Mario Run. Super Mario Run releases in December. Nintendo carries a Zacks Rank #2 (Buy).
2. Per media reports, Activision Blizzard is planning to create an e-sports league based on its latest franchise Overwatch. Activision CEO was quoted by media reports saying that viewership for e-sports surpasses that of NFL and NBA and as a result the company is working on monetizing this lucrative opportunity.
With continued increases in viewership as well as sponsorships and media coverage, e-sports is here to stay. Per research firm Newzoo, it is estimated that revenues from e-sports will grow 43% year over year to $463 million in 2016 and jump to $1.1 billion by 2019. To grab a share of this profitable opportunity, in October last year, Activision formed an exclusive e-sports unit spearheaded by former ESPN CEO Steve Bornstein.
In Jan 2016, the company acquired MLG, a leading e-sports player for an estimated $46 million. Founded in 2002, MLG is one of the biggest names in the e-sports arena. Activision has already established Call of Duty World League. Activision carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance
The following table shows the price movement 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
0.07%
27.20%
EA
0.16%
30.58%
GLUU
-1.47%
-26.91%
MSFT
4.71%
17.98%
NTES
2.17%
100.58%
TTWO
5.65%
28.86%
ZNGA
-2.46%
14.40%
Over the last five trading sessions, Take Two Interactive (TTWO - Free Report) was up 5.65% while Zynga was down 2.46%.
Over the last six-month period, NetEase (NTES - Free Report) surged the most (100.58%). NetEase has been in focus on reports that it will divest its news unit to focus on its gaming business. The increasing popularity of mobile-based games and the strength of PC games (licensed & self-developed) continue to keep investors interested in the stock. Moreover, growing mobile advertising revenues were an added incentive.
Glu Mobile was down 26.91% over the same time frame due to the underperformance of most of its releases. Also, the company lowered its guidance for 2016. But its significant share repurchase authorization and the much anticipated Taylor Swift game keep hopes alive. It recently purchased Poke Radar. Poke Radar is a community app built by Pokémon Go fans.
Confidential: Zacks' Best Investment Ideas
Would you like to see a hand-picked "all-star" selection of investment ideas from the man who heads up Zacks' trading and investing services? Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand.Click for his selected trades right now >>