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Why Video Game Stocks Activision (ATVI) & Take-Two (TTWO) Gained Today

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Shares of Activision Blizzard (ATVI - Free Report) and Take-Two Interactive (TTWO - Free Report) were surging in afternoon trading Tuesday as Wall Street grew more bullish about the video game companies ahead of new releases and the busy holiday shopping season.

Activision drew analyst acclaim because of the new “Blackout” game mode in its upcoming Call of Duty: Black Ops 4 title. Blackout is meant to rival Epic Games’ Fortnite Battle Royale, a free-to-play shooter which has attracted more than 100 million gamers since launching last year.

“Buzz from streamers was sensational, in our view,” wrote Benchmark’s Mike Hickey in a note Tuesday. “Popular Twitch streamers were gushing on the quality and fun of the play, while subscriber comments were calling Blackout a Fortnite and/or PUBG killer.”

Considering the success of Fortnite, it is no surprise that video game behemoths like Activision would attempt to cash in on the battle royale structure. What’s more, the cult-like fandom surrounding Fortnite underscores new revenue opportunities in the ever-growing worlds of esports, live streaming, and collectibles (also read: Buy These 3 Stocks To Profit From 'Fortnite Battle Royale').

It would certainly take a lot for Call of Duty’s Blackout mode to topple Fortnite, but if anyone can take the battle royale throne from Epic Games, it is Activision—one of the world’s largest video game publishers.

Epic Games is a pioneer in the video game industry, having developed the innovative Unreal Engine and produced titles like Gears of War, but Call of Duty is the best-selling shooter franchise of all time and carries the name recognition needed to succeed in what is becoming a hotly-contest subgenre. Chinese tech giant Tencent (TCEHY - Free Report) owns a 40% stake in Epic Games.

Elsewhere, Take-Two shares saw positive analyst sentiment from Stifel, which raised its price target for the stock to $144 from $137. This new bullish target represents a nearly 11.5% upside from TTWO’s latest close and is based on growing optimism for Red Dead Redemption 2.

Stifel said its pre-sales analysis for the highly-anticipated third entry in the Red Dead series were encouraging. The game is due out on the PlayStation 4 and Xbox One on October 26, 2018—just in time for the holiday season.

Take-Two also celebrated the release of NBA 2K19 on Tuesday.

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