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S&P 500   3,693.23
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MarketBeat: Week in Review 9/19 – 9/23
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China using civilian ships to enhance navy capability, reach
German leader seeks energy deals, alliances on Gulf trip
The 3-Stock Retirement Blueprint (Ad)
World Bank head says he's not a climate denier, won't quit
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S&P 500   3,693.23
DOW   29,590.41
QQQ   275.51
Become an Ethical Hacking and Cybercrime Expert
The 3-Stock Retirement Blueprint (Ad)
Will Wall Street's Enthusiasm About Datadog Lead To Big Gains?
MarketBeat: Week in Review 9/19 – 9/23
The 3-Stock Retirement Blueprint (Ad)
China using civilian ships to enhance navy capability, reach
German leader seeks energy deals, alliances on Gulf trip
The 3-Stock Retirement Blueprint (Ad)
World Bank head says he's not a climate denier, won't quit
Kim Kardashian culls Dolce & Gabbana archives for Milan show
S&P 500   3,693.23
DOW   29,590.41
QQQ   275.51
Become an Ethical Hacking and Cybercrime Expert
The 3-Stock Retirement Blueprint (Ad)
Will Wall Street's Enthusiasm About Datadog Lead To Big Gains?
MarketBeat: Week in Review 9/19 – 9/23
The 3-Stock Retirement Blueprint (Ad)
China using civilian ships to enhance navy capability, reach
German leader seeks energy deals, alliances on Gulf trip
The 3-Stock Retirement Blueprint (Ad)
World Bank head says he's not a climate denier, won't quit
Kim Kardashian culls Dolce & Gabbana archives for Milan show
S&P 500   3,693.23
DOW   29,590.41
QQQ   275.51
Become an Ethical Hacking and Cybercrime Expert
The 3-Stock Retirement Blueprint (Ad)
Will Wall Street's Enthusiasm About Datadog Lead To Big Gains?
MarketBeat: Week in Review 9/19 – 9/23
The 3-Stock Retirement Blueprint (Ad)
China using civilian ships to enhance navy capability, reach
German leader seeks energy deals, alliances on Gulf trip
The 3-Stock Retirement Blueprint (Ad)
World Bank head says he's not a climate denier, won't quit
Kim Kardashian culls Dolce & Gabbana archives for Milan show

Are These 3 Video Game Stocks Now In Play?

Are These 3 Video Game Stocks Now In Play? Activision Blizzard (NASDAQ: ATVI) stock hasn’t gotten much traction since its earnings report on August 1. 

On the one hand, that lack of movement is not particularly surprising, given that Microsoft has offered to buy the game software and console maker for $68.7 billion, or $95 per share. Stocks often gap higher on a buyout bid, as Activision did in January.

On the other hand, there’s still a wide gap between Activision’s current price and Microsoft’s offer. Activision shares were trading between $80 and $81. That’s essentially where they have been rangebound for the past few weeks. 

Here’s where uncertainty about the Microsoft deal comes into play: The acquisition is under scrutiny from antitrust regulators not only in the U.S., but globally. While the market waits for multiple approvals, the stock is languishing well below that magic price of $95. 

This means there could be an opportunity for investors to exploit the difference between the offer and the current price. If the deal goes through, that could result in a big payday for investors. But there’s still a risk that the acquisition may not be approved, which would send the price lower, at least for some period of time.

However, industrywide, there are signs of trouble, as revenue is slowing following a pandemic-era boost. While people were home looking for entertainment, video games fit the bill. These days, with pretty much everyone out and about? Gaming has lost some luster. 

In addition, component makers are suffering through supply-chain slowdowns, which limits revenue. 

Activision earned $0.48 per share in the most recent quarter, a year-over-year decline of 60%. That’s pretty significant. Revenue was $1.644 billion, down 28%. Year-over-year sales have been lower for the past three quarters, following two quarters of sales deceleration. 


Looking back, it’s now clear that peak revenue growth occurred in the quarter ended in December 2020, before vaccines were widely available and more people began venturing out of their houses again. 
Are These 3 Video Game Stocks Now In Play?

Underperforming S&P 500

Video game rival Electronic Arts (NASDAQ: EA) has fared better in terms of earnings and revenue growth, but its share price is underperforming the S&P 500 by a wider margin than Activision. 

In its latest quarter, EA earned $0.47 a share on revenue of $1.767 billion, gains of 688% and 14%, respectively. The company guided towards adjusted earnings of $1.30 per share in the current quarter, on revenue of $1.75 billon, below Wall Street’s expectation of $1.46 per-share earnings on sales of $1.84 billion. EA’s full-year guidance also fell short of analysts’ views.

However, despite that lower-than-expected guidance, the stock is up 3.7% since reporting earnings. It’s chopped around near its 50-day moving average in recent weeks, and on Tuesday cleared resistance above $134.92 before pulling back. It remains to be seen whether it can power decisively past that level and sustain a rally. 
Are These 3 Video Game Stocks Now In Play?  

Roblox Total Users Down

Roblox (NYSE: RBLX), another large-cap gaming company, is once again reporting losses after notching profitable years in 2020 and 2021. The stock is trading fractionally higher since delivering quarterly results last week.

Although the company said the number of daily users grew year-over-year, there was some bad news: The total number of users was down, relative to the previous quarter. 

The stock is down 52.54% year to date, although it’s rallied 23.11% in the past month. 

According to MarketBeat analyst data, the consensus rating on the stock is “hold,” with a price target of $44.94, a 5.69% downside. 

The stock generated excitement among investors and traders at the time of its March 2021 direct listing, as influential investors such as Ark Investment Management’s Cathie Woods purchased shares. In fact, as recently as August 10 Ark noted in its trade alert that it has purchased 147,455 shares of Roblox for the ARK Innovation ETF (NYSEARCA: ARKK)

While institutions are obviously adding shares, as we can see in recent rallies of gaming stocks like EA and Roblox, watch the growth prospects before deciding to make a play. That’s true for any stock in any sector, but particularly relevant at the moment for an industry that is seeing declining sales and even issuing guidance below Wall Street’s expectations.
Are These 3 Video Game Stocks Now In Play?

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Activision Blizzard (ATVI)
2.3672 of 5 stars
$74.95-2.7%0.63%31.23Hold$93.58
Roblox (RBLX)
1.9694 of 5 stars
$35.54+0.8%N/A-37.41Hold$43.78
Electronic Arts (ERTS)
0 of 5 stars
$0.00flatN/AN/AN/AN/A
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in Activision Blizzard right now?

Before you consider Activision Blizzard, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Activision Blizzard wasn't on the list.

While Activision Blizzard currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Kate Stalter

About Kate Stalter

Contributing Author: Retirement, Asset Allocation, and Tax Strategies

Kate Stalter is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies. Kate also serves as a capital-markets contributor at Forbes.com, and is an expert columnist for the investment advisory channel at U.S. News & World Report.
Contact Kate Stalter via email at stalterkate@gmail.com.
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