Among the top stories this week, Activision Blizzard Inc (ATVI - Analyst Report) launched the highly anticipated title Destiny: Rise of Iron. The maker of Xbox One, Microsoft Corp (MSFT - Analyst Report) announced that by current year-end, it is aiming to buy back $40 billion worth of shares.
A Recap of the Developments
1. Video game publishing giant, Activision Blizzard has released one of the most anticipated titles of the year, Destiny: Rise of Iron for PS4 and Xbox One. Prized at $29.99, Rise of Iron has seen blockbuster response in terms of pre-orders and Activision has called it the “most anticipated expansion for Destiny ever.” Also, Destiny fans will be treated with Destiny – The Collection. Prized at $59.99,The Collection, as the name suggests, is a compilation of all releases of the shooter franchise so far. The combination of Rise of Iron and The Collection has made the release so important. Destiny has been developed by Bungie of Halo fame and published by Activision. First released on Sep 9, 2014, it is a first person shooter game set in a mythical-cum-science fiction world. It is the first title to be released under Activision-Bungie’s 10-year deal. In fact, Destiny holds the record for the being the biggest new franchise launch. Destiny earned over $500 million in just a day of its release. The franchise has an aggregate score of 75/100 on Metacritic while Game Informer has given it 8.75 out of 10. Activision carries a Zacks Rank#2 (Buy).
2. Microsoft will be buying $40 billion worth of shares or 9% of its total market cap by 2016. The Xbox One creator also raised its dividend by 8%. Microsoft has been one of the most active companies in terms of share repurchases. Reportedly, the company has shelled out $140 billion on its buyback programs so far. In 2013, Microsoft had commenced a stock repurchase program, that was also worth the same amount as the current repurchase target. Microsoft carries a Zacks Rank#3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3. Take Two Interactive (TTWO - Snapshot Report) has released NBA 2K17 for PS 3&4, Xbox One, Xbox 360 and Windows PC, carrying a price tag of $59.99. Take Two also released NBA 2K17 Kobe Bryant Legend Edition for $79.99, for both digital and physical version, on Xbox One and PS4. The NBA series is one of the biggest revenue generators for the company. NBA2K16, reportedly, has sold over 8 million copies. At its last earnings call, Take Two said that virtual currency revenues from NBA 2K were the second biggest contributor to bookings from recurrent consumer spending after its super successful Grand Auto Theft Online. For the current fiscal, management expects bookings in the range of $1.5 billion to $1.6 billion with primary contributors being NBA 2K16, NBA 2K17, Grand Theft Auto V, Grand Theft Auto Online and Mafia III. Mafia III is another highly anticipated title, scheduled for release in October.
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:
Last 5 Days
Last 6 Months
Over the last five trading sessions, NetEase (NTES - Snapshot Report) was up 18.24% while Glu Mobile (GLUU - Snapshot Report) was down 3.07%.
Over the last six-month period, NetEase Inc. surged the most — nearly 68.62%. NetEase has been in the news as it was widely anticipated that the Chinese gaming company will divest its news unit to focus on its gaming business. Plus, recently the company reported strong second-quarter 2016 results. 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 28.25% 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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