Shares have fallen more than 23% since October
Gaming companies such as Take-Two Interactive (TTWO) have had a difficult 2018. TTWO has fallen 3.5% in 2018. Its stock has fallen 6% in December and 25% since the start of October.
Comparatively, shares of Electronic Arts (EA), Activision Blizzard (ATVI), and Zynga (ZNGA) have fallen 25%, 26%, and 8%, respectively, this year. The tech sell-off has exaggerated this decline. Since the start of October, EA has slipped 35%, while ATVI and Zynga are down 44% and 8%, respectively.
Competition and forecasts have affected gaming shares
Gaming companies have been negatively affected by the spectacular success of Fortnite, which now has over 125 million players. They’ve also projected revenues that are lower than Wall Street’s estimates. Initial sales for Activision Blizzard’s latest Call of Duty game were lower than expected. EA has also delayed the release of its online multiplayer game Anthem by a few months.
This stock market correction for gaming companies has been long overdue. EA, TTWO, and ATVI have generated significant returns over the last few years, which may have resulted in their overvaluation.
Despite the recent pullback, EA stock has risen 252% in the last five years. Comparatively, ATVI and TTWO have risen 180% and 500%, respectively.