I’ve been looking at all the news and hot-take analyses around loot boxes, lacklustre new game announcements (e.g. Diablo Immortal), and the constant statements of “disappointing sales” from top franchises…
Lots of folks have been looking at the declining share prices of EA, Activision Blizzard, and Ubisoft and attributing it to all the negative news that’s been mounting up around titles like Battlefield V and Destiny 2, the negative sentiment that’s taken hold of the publishers’ business practices, and the failure in confidence of once-trusted brands like Blizzard.
But check out the charts below. The share prices just seem to track the All Share Indices. So maybe there isn’t much to read into regarding the share prices movements at all?
Anyone else looked into this and have data/insights I might be missing?
(The EA and Activision Blizzard stocks shown are listed on the Nasdaq, and Ubisoft is on Euronext)
EA, Ubisoft, and Activision share prices over the past year
Hmmm, but that can be said for most companies. However, check what Ubisoft shares did immediately after the AC Odyssey release vs what the market did overall. There definitely seems to be some correlation there, but I do think the industry as a whole is misreading some data
I would like to see how the share price growth rate compares to the earnings per share growth rate for the same period. A large discrepancy would likely indicate that the company’s performance was probably not the primary influence of the share price for that period.
Maybe. There are many variables you need to isolate before drawing conclusions about why stockholders sold for the price they did, though.
For instance… the whole tech industry bled this year. Maybe if you were to compare game company stocks to the tech industry as a whole, the drop is actually in-line with the average. I’ll try and take a look at that data if I get a chance.
That said, the massive drop in Activision’s price at the start of November does seem to coincide with the announcement of Diablo Immortal and Activision’s statement that it was disappointed with the sales of Destiny 2: Forsaken.
But that doesn’t explain the downward trend since July.
What I’m asking is… how much of the stock price going down was due to negative sentiment in the company, and how much is due to the overall market being bearish?
And a follow-up: If the overall market wasn’t in decline, would the negative news coverage have hit the stock price as hard in November?
What I’d really like to see is a survey of people who dumped their stock.
Sadly this goes a little beyond my realm of expertise. However, the gaming industry is more closely related to the entertainment industry but hugely influenced by the tech industry. There are a couple of companies that actually track and report on this, but the cheaper ones are like $5000 per request
Yeah that’s the big issue I’ve run into… getting data quickly to work with is very pricey. I’d basically have to capture everything myself to keep things affordable and above-board.
He’s not completely irrational; personally I don’t believe we’re going to see any of the big studios close down, but I do think we’re going to see a change in how they do business.
His video on insider selling is very interesting. I would have to see how many shares these folks still hold in the company after all their sales, but it reminds me of an article I read this year from Alec Hogg about the Capitec CEO selling some of his shares in the company.
(The larger context of this was that people were suspicious of this happening during the whole Viceroy Research scandal.)
An excerpt:
I’ve become a little gun shy about drawing conclusions from the purchases by insiders of shares in their companies. The billions blown by Steinhoff’s former chairman Christo Wiese tends to have that kind of impact. Ditto that infamous R5bn share buy-back the company itself did shortly before the proverbial hit the fan.
But when insiders sell shares, the message they send us is less ambiguous. Nobody offloads stock in your own company unless you believe it is fully valued. Or overpriced. So I’m paying attention to the SENS announcement that both the incumbent and former CEO of Capitec have been selling big chunks of their holdings.
