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Video Gaming ETFs Down Despite Mixed Earnings

·3 min read

Video gaming earnings have been mixed in the current reporting season. Activision Blizzard ATVI delivered non-GAAP earnings of 48 cents per share for second-quarter 2022, down 60% year over year due to a soft Call of Duty: Vanguard launch last fall and a slow year for the gaming industry so far as it deals with hardware supply chain issues affecting consoles, inflation and a lack of big hits.

Consolidated revenues plunged 28.4% year over year to $1.64 billion. Total revenues declined 15.2% to $1.57 billion after adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and the elimination of intersegment revenues. The Zacks Consensus Estimate for earnings and revenues was pegged at 3 cents per share and $1.53 billion, respectively.

Electronic Arts EA reported first-quarter fiscal 2023 earnings of $1.11 per share, which surged 53.6% year over year. Revenues exceeded the guidance of $1.675 billion to $1.725 billion and increased 13.9% year over year to $1.76 billion, driven by strength in the FIFA franchise and the F1 22 launch. FIFA Online 4 hit a new high in engagement and FIFA Mobile delivered its biggest net bookings quarter ever.

The Zacks Consensus Estimate for loss and revenues was pegged at 6 cents per share and $1.25 billion, respectively. Net bookings exceeded the expected range of $1.20 to $1.25 billion but decreased 2.8% year over year to $1.29 billion.

Take-Two Interactive Software TTWO reported a first-quarter fiscal 2023 loss of 76 cents per share against the year-ago quarter’s earnings of $1.30 per share. Net revenues jumped 35.5% year over year to $1.10 billion. Net Bookings surged 40.9% to $1 billion.

The Zacks Consensus Estimate for earnings and revenues was pegged at 53 cents per share and $1.04 billion, respectively. Game revenues (92.5% of revenues) improved 28% year over year to $1.02 billion.  Advertising revenues (7.5% of revenues) jumped 389.4% year over year to $83.2 million.

ETFs in Focus

Despite mixed earnings, video-gaming ETFs underperformed lately. Global X Video Games & Esports ETF HERO (down 2.1%), VanEck Video Gaming and eSports ETF ESPO (up 0.40%) and Roundhill BITKRAFT Esports & Digital Entertainment ETF NERD (down 0.3%) – all underperformed in the past one month.

These funds are down 3.1%, 2.4% and 1.7% past week, respectively. These ETFs are down massively in the year-to-date frame too. Rising rate worries amid a hawkish Fed weighed on the broad-based technology sector as these are high-growth in nature and underperform in a rising rate environment (read: A Comprehensive Guide to Video-Gaming ETFs).



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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
TakeTwo Interactive Software, Inc. (TTWO) : Free Stock Analysis Report
 
Electronic Arts Inc. (EA) : Free Stock Analysis Report
 
Global X Video Games & Esports ETF (HERO): ETF Research Reports
 
VanEck Video Gaming and eSports ETF (ESPO): ETF Research Reports
 
Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD): ETF Research Reports
 
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Zacks Investment Research