SONY's PlayStation 5 Surpasses 50M Units in Sales Since Launch
Sony Corporation SONY recently highlighted that PlayStation 5 (PS5) has sold 50 million units to consumers since its launch in November 2020. The addition of highly popular games and continued innovation to boost the gaming experience (including PS5 game streaming for PlayStation Plus Premium members) have been driving factors behind console sales.
SONY also noted that this was the biggest November (in terms of sales through to customers) for PS5. The outperformance was driven by recent gaming hits such as Marvel’s Spider-Man 2, Baldur’s Gate 3, Alan Wake 2 and EA SPORTS FC 24. The debut of Roblox on PlayStation has been an additional tailwind.
Moreover, improving consumer demand trends bode well. Per a report from Grand View Research, the global video game market is set to grow at a CAGR of 13.4% from 2023 to 2030.
To make the most of the increasing demand, SONY announced the launch of a new PS5 model, with an attachable ultra-HD Blu-ray disc drive and a 1TB solid state drive or SSD for more internal storage in October 2023.
Sony Corporation Price and Consensus
Sony Corporation price-consensus-chart | Sony Corporation Quote
Compared with earlier models, PS5 is much slimmer, with about 30% less volume and 24% lighter. This new model has four separate cover panels, with the bottom in a matte finish while the top portion has a glossy look.
SONY’s PS5 model is available from November 2023 in the United States at selected local retailers and direct.playstation.com. The model will be rolled out globally in the subsequent months. This will become the only model available once the existing inventory of the current PS5 model has been sold out, highlighted management.
G&NS Segment Continues to Drive the Top Line
Sony’s performance is benefiting from continued strength in the Games & Network (G&NS) segment. Its gaming segment is the largest contributor to the top line, with a 33.7% share of total revenues in the last reported quarter.
G&NS sales were up 32% year over year to ¥954.1 billion in the second quarter of fiscal 2023. Segmental sales increased on the back of positive impacts of forex movement, higher sales of first-party titles and improving hardware sales. Operating income rose to ¥48.9 billion from ¥42.1 billion in the prior-year quarter. The upside was mainly due to a rise in sales of non-first-party titles, including add-on content, which offset an increase in losses from hardware.
SONY sold 4.9 million units of PS5 in the fiscal second quarter, up 25% year over year from PS4 units sold in the prior-year quarter. The company continues to expect to sell more than 25 million units of its PS5 in the current fiscal year. In the last fiscal year, it sold 19.1 million units of PS5.
Driven by strengthening momentum in the G&NS, and Music segments’ sales, Sony has revised its outlook for the fiscal year ending Mar 31, 2024. It now expects sales of ¥12,400 billion compared with the earlier guidance of ¥12,200 billion. Net income is now estimated to be ¥880 billion compared with the prior prediction of ¥860 billion. Operating income is suggested to be ¥1,170 billion. Operating cash flow is envisioned to be ¥1,160 billion compared with ¥1,250 billion projected earlier.
However, SONY lowered guidance for the Pictures and Financial Services segments. Stiff competition and weak global macroeconomic conditions are concerning for this Zacks Rank #4 (Sell) company.
Shares of the company have gained 17.3% in the past year compared with the sub-industry’s and S&P composite’s growth of 18.3% and 25.4%, respectively.
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Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Blackbaud BLKB, NETGEAR NTGR and Watts Water Technologies WTS. Each stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS inched up 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB gained 48.5% in the past year.
The Zacks Consensus for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR were down 19.3% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved by 3.9% in the past 60 days to $8.08.
WTS’ earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS jumped 41.6% in the past year.
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