Videogame Stock Roundup: ATVI, ZNGA, GLUU, SNE Earnings, Nintendo Announces 2DS XL

Earnings dominated video game space last week with Activision Blizzard (NASDAQ:ATVI) , Zynga Inc. (NASDAQ:ZNGA) , Glu Mobile Inc. (NASDAQ:GLUU) and Sony Corp. (NYSE:SNE) reporting quarterly results. Meanwhile Nintendo announced a new addition to its 3DS console, 2DS XL.

Recap of the Developments

1. Earnings

Activision Blizzard: Activision posted first-quarter 2017 adjusted earnings of 27 cents and revenues (including deferrals) of $1.196 billion, which easily beat the respective Zacks Consensus Estimate of 16 cents and $1.103 billion. However, on a year-over-year basis, revenues (including deferrals) were down approximately 18%.

For second-quarter 2017, Activision anticipates GAAP revenues of $1.425 billion and earnings per share of 15 cents. On a non-GAAP basis, revenues and earnings are likely to be $1.425 billion and 38 cents per share, respectively. Deferral revenues are expected to be around negative $225 million.

Currently, Activision carries a Zacks Rank #2 (Buy).

Zynga Inc: Zynga reported first-quarter 2017 loss per share of 1 cent that came in line with the Zacks Consensus Estimate. Revenues of $207.4 million beat the consensus mark of $190.9 million. Zynga’s mobile daily active users (DAU) grew 16% year over year to 18 million. Zynga carries a Zacks Rank #3.

Glu Mobile Inc: Glu Mobile reported first-quarter 2017 loss per share of 17 cents compared with the Zacks Consensus Estimate of a loss of 9 cents and a loss of 6 cents reported in the year-ago quarter. Revenues of $56.8 million beat the consensus mark of $53.6 million and grew 4.2% year over year. Also, the company said that the MLB Tap Sports Baseball 2017 game with MLB and Kris Bryant launched recently was ranked #1 free game on the U.S. App Store for iPhone for six consecutive days following its release.

Glu Mobile carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sony Corp: Sony reported fourth-quarter fiscal 2016 earnings per share of ¥21.45 (19 cents), against the year-ago quarter’s significant loss of ¥70.03 per share. The bottom line benefited from decent top-line growth, as well as fall in selling, general and administrative, and financial services expenses.

Sales and operating revenues at the Game & Network Services (“GN&S”) segment increased 21% year over year to ¥381.8 billion ($3,409 million). Improvements in the PS4 software sales (including sales through the network) and impressive market traction of the recently launched PlayStationVR boosted sales.

Currently, the company expects total sales to be around ¥8,000, up 5.2% from fiscal 2016 driven by impressive sales at G&NS, Pictures and Semiconductors segments. Sony Corp carries a Zacks Rank#2 (Buy).

2. Per media reports, Nintendo is gearing to launch yet another 3DS console, namely 2DS XL. The new portable console will be priced at $150 and will be available on store shelves in July 2017. Much similar to 3DS, the new console reportedly has a C Stick and ZL/ZR Buttons and is available in Black and Turquoise, and White and Orange color combinations.

At present, Nintendo is basking in the success of back-to-back hits in the form of NES mini and Switch. Last week, Nintendo announced its quarterly results and stated that Switch, released on Mar 3, 2017 — has sold 2.74 million units. Its new game, The Legend of Zelda: Breath of Wild Fire has sold 2.76 million units. Nintendo is also coming up with the mini version of another hit console, SNES.

At present Nintendo sports a Zacks Rank #2.We note that Nintendo has massively outperformed the Zacks Toys-Games-Hobbies industry in the last year. While the industry gained 35%, the stock returned 82.54%.

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:

Over the last five trading sessions, Activision was up 6.48% whereas NetEase (NASDAQ:NTES) was down 1.35%.

In the last six-month period, Take Two Interactive (NASDAQ:TTWO) surged the most (31.8%). The company continues to benefit from its popular offerings like GrandTheft Auto V and Grand Theft Auto Online (though sales are slowing down), along with its other releases like NBA 2K17. In fact, higher sales of the digital version of the games add to the company’s margins. Take Two continues to expect growth in digital revenues, driven by higher sales of full game downloads and increase in recurrent consumer spending.

The company recently forayed into the free-to-play games space with the acquisition of game developer, Social Point. The acquisition will help it boost its performance going ahead. Also, the company is well positioned to benefit from the highly-anticipated launch of Red Dead Redemption 2 later this year.

Take Two also inked a partnership with NBA to launch NBA 2K eLeague, making it the “first eSports league operated by a U.S. professional sports league.” The NBA 2K league will be functional in 2018.

Want to learn more about video game stocks? Make sure to check out our podcast below!

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>