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Videogame Stock Roundup: Zynga Gets a New CEO, Tencent Boasts 21.5% stake in Glu Mobile

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Among the top stories this past week, Farmville maker Zynga (ZNGA - Free Report) appointed a new CEO while the Chinese company Tencent Holdings increased its stake in Glu Mobile (GLUU - Free Report) to 21.5%. Meanwhile, Activision Blizzard (ATVI - Free Report) pulled out of E3 and HTC Vive received tremendous response with15,000 sets booked in less than 10 minutes.

Top Stories This Week

1. San Francisco based Zynga appointed Frank Gibeau as its new CEO who will take over from founder and current CEO Mark Pincus, effective Mar 7, 2016. Pincus will serve as the executive chairman of the beleaguered video gaming company. Zynga has been in trouble for quite some time. The company had created quite a buzz with its web-based games FarmVille (2009) and CityVille (2010) but subsequently failed to make a similar splash with its mobile games.

However, Gibeau’s appointment has been cheered by Wall Street given his impressive track record. A 20-year old veteran at Electronic Arts (EA - Free Report) , Gibeau was instrumental in turning around EA’s mobile division. He has also been on Zynga’s board for the last seven months.

2. Tencent Holdings Limited has now increased its share in Glu Mobile to 21.5%. Per media reports, this Chinese investment holding company bought over 3 million shares of Glu Mobile from Feb 8 to Feb 25. The company had first purchased a 14.9% stake in Apr 2015 for $126 million or $6 per share. Glu Mobile is also working to bring Tencent’s shooter game WeFire to the Americas, Australia and EMEA by the second quarter of 2016.

3. Activision Blizzard has pulled out of E3, marking the second high profile exit from the E3 expo. Activision has announced that this year it will no longer have a booth space at the expo. Unlike EA, which plans to host a standalone event to showcase its new titles, Activision will be depending on its partner Sony (SNE - Free Report) to display its new offerings. 

4.  It seems Facebook’s (FB - Free Report) Oculus Rift will be up against tough competition from HTC Vive VR headset. Per media reports, 15K units of Vive were booked in the first 10 minutes on Feb 29, when the company started taking pre orders. Undaunted by the $799 price tag, excited buyers logged on to the online store in large numbers, resulting in a crash.Even bookings for Rift, priced at $599, had been phenomenal leading to a temporary site crash.

However, both Rift and Vive need high end PC configuration (read pretty expensive) making it appealing only to a niche set of consumers. On the other hand, Sony’s PlayStation VR, priced at $399, seems to have an edge over both Rift and Vive, as these would be compatible with all PS4 consoles in the world which at present stand at over 35.9 million units. VR/AR is the next step in technological innovation besides the development of AI technology. Though VR/AR may be creating a buzz for gamers right now, the technology is eventually expected to improve other critical areas of human life.

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

4.41%

10.21%

EA

8.78%

-1.50%

GLUU

-19.23%

-29.37%

MSFT

1.02%

20.34%

NTES

-9.02%

28.21%

TTWO

5.48%

27.42%

ZNGA

14.07%

-10.63%

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the last five trading sessions, Glu Mobile was down 19.23% while Zynga was the highest gainer, up 14.07%.

Over the last six-month period, NetEase (NTES - Free Report) surged the most — nearly 28.21%. Increasing popularity of mobile based games and strength of PC games (licensed & self developed) continue to keep investors interested in the stock. Moreover, growing mobile advertising revenues is an added stimulus. Recently, the company beat Q4 earnings estimates on a 118.6% year-over-year rise in revenues. Revenues from online games came in at $849.5 million, registering a 103.2% year-over-year increase in the fourth quarter. 

However, Glu Mobile was down 29.37% over the same time frame due to its underperforming releases this year. That said, strong fourth-quarter results, share repurchase authorization and the Taylor Swift game have made investors happy. .

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