Weekly Update On Gaming Industry: GameStop & Electronic Arts
The gaming industry managed to outperform last year’s performance, despite the dull physical software demand. According to the NPD report for the month of December, the industry generated $3.25 billion in the last calendar month, down from $3.28 billion in December 2013. However, the highlight of the last year was the strong demand for consoles during the entire year that managed to overshadow the lagging software sales. In December, gamers spent $1.31 billion on hardware, down nearly 4% year-over-year (y-o-y). However, the trend continued in the software segment, as the net software sales for December 2014 reached $1.25 billion, down 2% year-over-year. [1]
For the entire calendar year of 2014, gamers spent roughly $5.1 billion on physical hardware for video games, up more than 18% y-o-y, offsetting software sales, which were nearly $5.3 billion, down 13% y-o-y. As a result, the total revenue for the industry in the U.S. was up 1% y-o-y. This indicates the strong demand for the new console generations: Microsoft’s Xbox One and Sony’s PlayStation4.
Here’s a quick round-up of some news related to the gaming industry covered by Trefis.
- Will GameStop Stock Continue To Rise?
- What’s Next For GameStop Stock After Rising 26% Last Week?
- Can GameStop Stock Advance Continue After A 92% Surge In A Week?
- Vaxart, Macy’s, Gogo: Will These Stocks See A GameStop Like Short Squeeze?
- Time To Sell GameStop Stock After A 170% Rally?
- How Is GameStop Likely To Have Fared In Q1?
GameStop
GameStop (NYSE:GME), reported an increase of 147% y-o-y in its hardware sales due to strong console performance in the U.S. in the third quarter. The company generated nearly $5.8 billion in revenues and might cross its last year’s annual revenue figure of $9 billion when the annual report comes out next month. With hardware sales still strong in the domestic market, and with new popular titles released in the holiday quarter, the company might report strong numbers for its core segments. Moreover, GameStop is witnessing improved performance by its technology brands, which increased by 55 in number in the third quarter.
GameStop’s stock has traded between the range of $34 to $37 during the last week. Our price estimate for the company’s stock is $42, implying a market cap of $4.8 billion, which is nearly 15% above the current market price. We are factoring in changes in our model for the company and will update it shortly.
See our complete analysis of GameStop
Electronic Arts
Electronic Arts (NASDAQ:EA) is scheduled to release its Q3 earnings report on January 27. [2] In the recently released report by the NPD group for the month of December, EA’s Madden NFL 15 and FIFA 15 managed to retain their place in the top 10 games by units sold in the U.S. [3] The company’s sports titles maintained their dominance in the respective targeted regions. According to latest UK rankings by Gfk chart track, FIFA 15 was ranked #2 in the UK video game standings. [4] On the other hand, Electronic Arts announced the release of the new digital expansion, Shadow of Revan, for its Star Wars franchise on December 9. [5] According to the trend, industry-wide software sales rise during the holiday season. Therefore, the company is confident of its financial performance in the December ended quarter.
EA’s stock rose from $45 to $48 during the last week. Our price estimate for the company’s stock is $39. implying a market cap of $12 billion, which is nearly 18% below the market price.
See our complete analysis of Electronic Arts stock here
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