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Video game stocks look to ride lockdown boost to new console release: At the Open

  • Video game stocks are on the move, buoyed by results from Take-Two.

Take-Two (TTWO+4.1%) is leading Activision (ATVI+2.1%) and Electronic Arts (EA+1.2%) higher after reporting a huge fiscal Q1 jump in bookings and issuing bullish guidance

That indicates "continued strong gaming trends" from the pandemic tailwind, Morgan Stanley said in a note upping its TTWO price target to $176.

Video game companies are riding the stay-at-home lockdown benefits, with a surge in the number of people playing and the number of hours played.

Two video game and eSports funds, the Global X Video Games & Esports ETF (NASDAQ:HERO) and the VanEck Vectors Video Gaming and eSports ETF (NASDAQ:ESPO) are up about 50% in the past six months.

The stocks are looking like they could ride that momentum into the release of the new consoles. Sony’s PlayStation 5 and Microsoft’s Xbox Series X (with a TikTok feature?) are still slated for a holiday season debut.

Our “focus on connecting more players across more platforms will continue, as we  … expand support for cross-play, and reach more platforms with our games – including the next-gen consoles coming later this year,” EA CEO Andrew Wilson said in EA’s earnings call last week.

Activision reports after the bell today. The consensus EPS Estimate is $0.69 (+81.6% Y/Y) and the consensus net bookings estimate is $1.7B (+40.5% Y/Y).

The stock looks to have shaken off a report that employees of its Blizzard Entertainment unit were circulating a spreadsheet on Friday that anonymously disclosed their salaries and pay increases. Wage disparity between employees and executives is a major bone of contention in the video game industry.

Sector Watch

Staying in Communication Services (XLC+0.1%), Disney (DIS-0.6%) will issue its results after the bell today. It will be interesting to see if there is any numbers or hints of how many Disney+ subscribers it retained after the surge of signups for its premiere of Hamilton.

App downloads surged 74% over that weekend.

Moving to tech, Intel (INTC+0.6%) will be on the hot seat following its 7nm product delay at an investor meeting with UBS.

Jefferies boosted rival AMD (AMD+0.6%) today on Intel’s “systematic” delay.

DIS catching up to SPY in past 3 months

 

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Related Stocks

SymbolLast Price% Chg
TTWO--
Take-Two Interactive Software, Inc.
ATVI--
Activision Blizzard, Inc.
EA--
Electronic Arts Inc.
HERO--
Global X Video Games & Esports ETF
ESPO--
VanEck Video Gaming and eSports ETF