Activision (ATVI) stock caught in the crossfire of Electronic Arts (EA) and Take-Two (TTWO) bloodbath

 

Shares of Activision Blizzard (ATVI) stock dropped more than 10% Wednesday following the release of quarterly earnings and forward guidance from rival companies Electronic Arts (EA) and Take-Two Interactive Software (TTWO), leaving the earnings report battle royale arena stained red. Activision is set to report quarterly earnings on Feb. 12., and only time will tell if the company’s cash-cow Call of Duty can put ATVI at the top of the leaderboards.

Epic Games’s Fortnite, with its free-to-play model, has been an ever-growing thorn in the side of major developers. Developers are scrambling to evolve in the changing landscape, where gamers are beginning to show disdain for games that require an expensive initial investment that becomes short-lived without additional purchases like map packs add-ons, season passes, and other micro-transactions that create what critics say is a pay-to-win environment.

Electronic Arts (EA)

Shares of EA stock are down 12% Wednesday afternoon. Electronic Arts beat earnings per share estimates by $0.20, but missed revenue expectations of $1.75 billion, with revenues falling 18.4% year over year to $1.61 billion. The company also issued downside forward guidance, with earnings per share and revenue expectations falling well-short of Wall Street’s estimates.

In an earnings conference call, EA president Andrew Wilson blamed marketing and game delays for the lack of sales in the newest edition of one of the company’s biggest performers, Battlefield V. Battlefield V faced major backlash from fans when the marketing teaser-trailer introduced female soldiers into the game’s World War II battlefield setting, a drastic change from the historically accurate immersive experience the game is known for.

The backlash grew worse after EA’s chief creative officer, Patrick Soderlund, called fans “uneducated”, and said they could accept the changes or not buy the game. Within two weeks of the game’s release, Battlefield V was discounted 50% as game sales fell short of expectations by a wide margin. Soderlund left the company soon after.

Take-Two Interactive Software (TTWO)

Shares of TTWO stock are down 14% despite the company posting quarterly earnings beats on both the top and bottom lines. The slide is likely due to lackluster forward guidance, with estimates falling short of Wall Street expectations.

The company posted strong sales of the highly-anticipated Red Dead Redemption 2, with more than 17 million copies sold within the first two weeks after release. Take-Two stock has outperformed competitors but sold off with its peer software developers in recent months.

Activision Blizzard (ATVI)

ATVI stock is currently trading at $42.76 as of 3:05 PM on Wednesday, Feb 6, a drop of -$5.08, or -10.62% from the previous closing price of $47.84. Activision stock has traded between $42.53 and $45.00 so far today. Volume today is above average. So far 27,430,121 shares have traded compared to average volume of 10,063,657 shares.

Stock Score Report, InvestorsObserver’s proprietary scoring system gives ATVI stock a score of 37 out of a possible 100. That score is based on three component scores. A fundamental score of 96, a long-term technical score of 5 and a short-term technical score of 10. Our proprietary system combines short and long-term technical factors, Wall Street’s opinion, and other fundamental factors into an overall score that measures a stock’s suitability for investment.

Meanwhile, the major indices are down. The Dow Jones Industrial Average has fallen -0.09% to 25,387.81. The S&P 500 is down -0.29% to 2,729.80. The NASDAQ has fallen -0.42% to 7,371.06.

Symbols: ATVI EA TTWO

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