10.96 0.00 (0.00%)
After hours: 4:50PM EDT
|Bid||10.93 x 2900|
|Ask||10.91 x 3200|
|Day's Range||10.90 - 11.22|
|52 Week Range||10.75 - 17.27|
|Beta (3Y Monthly)||0.52|
|PE Ratio (TTM)||N/A|
|Earnings Date||Mar 28, 2019|
|Forward Dividend & Yield||1.52 (13.74%)|
|1y Target Est||12.00|
It's not difficult to understand why some investors see Activision Blizzard (NASDAQ:ATVI) as attractive at current levels. After all, Activision stock is much cheaper than it used to be, having dropped some 47% from its early October highs.Source: Shutterstock And while the company's 2019 guidance was disappointing, ATVI stock still has some positive catalysts. The gaming market is still growing, and Activision Blizzard can tap into that growth with three attractive franchises. * Top 7 Service Sector Stocks That Will Pay You to Own Them On this site earlier this month, both Will Ashworth and Josh Enomoto have explained why investors should "buy the dip" of ATVI stock. Both authors made good points.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMoreover, Activision stock traded above $80 just a few months ago. It's one of the giants of gaming, along with Electronic Arts (NASDAQ:EA) and Take-Two Interactive (NASDAQ:TTWO). Some of the company's headwinds should fade, and it should resume growing.But I've been skeptical about ATVI stock for a long time, and even after its pullback, I'm not ready to turn bullish on Activision stock. Trading at 21 times the company's 2019 earnings per share guidance, excluding certain items, ATVI is not necessarily cheap. And from a broader standpoint, I'm still not sure whether Activision's growth can accelerate going forward.For the past decade, ATVI 's profits haven't increased much, especially in metrics other than earnings per share. Looking forward, ATVI still needs to show that it can raise its bottom line before investors should jump into Activision stock. Two Brilliant MovesBack in 2010, Activision generated 79 cents of adjusted EPS. In 2019, the company provided EPS guidance of $2.10, again excluding certain items.Over the nine years, that's an 11.4% compound annual growth rate (CAGR), even though the company is expecting its EPS to decline sharply this year from the $2.72 of adjusted EPS it reported in 2018. Still, averaging annual EPS growth of more than 10% over a decade seems to suggest that Activision's business is performing well, while its profits are steadily growing.That's not really the case, however. Over that stretch, Activision's EPS spiked twice. In 2013, ATVI repurchased Activision stock from its former majority shareholder, Vivendi SA (OTCMKTS:VIVHY). That deal boosted Activision's EPS by over 25%. Three years later, ATVI bought Candy Crush developer King Digital Entertainment for $5.9 billion.Both deals were brilliant. ATVI paid $13.60 per share for the ATVI stock it acquired from Vivendi. Activision stock, of course, is up more than 200% from those levels even after its recent declines. And the King deal was risky, as many observers thought that Candy Crush's revenue was poised to decline. Instead, its bookings have continued to grow, while the success of Zynga (NASDAQ:ZNGA) has further demonstrated the resilience of the social-gaming space.Again, both deals were great moves by Activision management. But those moves aside, the company's business simply hasn't been that impressive. Activision Stock's Growth ProblemBack in 2010, ATVI generated adjusted net income of $991 million. In 2015, the figure had actually dropped to $975 million. But since the Vivendi deal shrank the amount of Activision stock outstanding, the company's EPS rose to $1.32 in 2015, versus the 79 cents that it had reported five years earlier.King, meanwhile,added $600 million to ATVI's net profit, while tax reform tacked on over $100 million in 2018. Even if ATVI's business doesn't grow at all this year, its net income would still reach about $1.7 billion.However, the company's EPS guidance indicates that its net income will come in at just $1.63 billion. Even accounting for the fact that Activision historically has guided conservatively and excluding King's contribution, ATVI will probably wind up generating close to zero pre-tax profit growth between 2010 and 2019.That's nine years in which the economy has been good. Additionally, the increased popularity of digital downloads should be boosting the company's revenue and margins, as middlemen like retailer GameStop (NYSE:GME) have been cut out of many transactions. And demand for video games - both in the U.S. and overseas - has steadily risen.With all those benefits, the earnings of Activision Blizzard's business has not grown this decade. ATVI made two great deals, but its business has been stagnant. What Can Boost ATVI Stock?In that context, the question going forward is: what changes can provide a catalyst for Activision stock? And I'm not sure that Activision has provided an answer.ATVI did announce last month that it would restructure and lay off roughly 775 of its employees. That should save it some money, but hardly enough to move the needle. Even $100 million of savings would only boost its earnings by about 6%. And the company's plan to "refocus its resources on its largest opportunities," as the company put it in an 8-K filing, raises yet another question. What, exactly, are those opportunities?The company's core franchises - Candy Crush, Call of Duty, and World of Warcraft - still are performing reasonably well. For a long time, many people have thought that World of Warcraft, for instance, has been poised to decline. But according to Activision's 10-K, the game's net bookings rose year-over-year in 2018. The same is true for the company's other two key franchises.Still, those games aren't growing all that quickly. And since they only account for 58% of its total revenue, they certainly won't be profitable enough to support the company's 20+ P/E multiple.Meanwhile, the rest of the company's portfolio appears to be struggling. Overwatch generated over 10% of the company's revenue in 2017 and less than 10% of it in 2018, according to the company's SEC filing. The company stunned investors in January by basically giving away Destiny. Hearthstone, and Diablo has faded.And now Activision Blizzard is blaming the decline of its earnings in 2019 to a light slate of new products and responding by laying off employees. Was Activision carrying dead weight for years? Or are there simply not that many opportunities for ATVI to chase?In any event, Activision needs an answer to the broader question: what can jump start its growth? The profit growth of its old games isn't going to suddenly start to accelerate. Its newer games are declining, and it doesn't have another hit on the horizon right now.That' outlook is not good enough to support the current valuation of Activision stock. Unless Activision's management can convince investors that it has a better plan, Activision stock probably won't rally.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Financial Stocks to Invest In Today * 7 Single-Digit P/E Stocks With Massive Upside * 5 Chip Stocks on the Rise Compare Brokers The post Why the Status Quo Won't Boost Activision Stock appeared first on InvestorPlace.
GameStop shareholders say they will nominate own directors if they aren't satisfied with the current board's response.
Hestia Capital Partners and Permit Capital Enterprise Fund are pushing for changes to the board of directors and a stepped-up buyback plan.
investors threatened a proxy fight if the videogame retailer doesn't take steps to improve its performance, including changing its board. In a letter to the directors of the Grapevine, Texas-based company, executives at Permit Capital Enterprise Fund L.P. and Hestia Capital Partners LP said GameStop has "dramatically underperfomed" the company's self-identified peer group, the Russell 2000 and the S&P 500. The two firms have a combined 1.3% stake in GameStop.
(Reuters) - GameStop Corp on Thursday received a letter from its shareholders Hestia Capital Partners LP and Permit Capital Enterprise Fund LP warning of a proxy fight if the company does not hold talks ...
Shares of GameStop Corp. were indicated up nearly 1% in premaket trade Thursday, after shareholders Hestia Capital Partners L.P. and Permit Capital Enterprise Fund L.P. urged the video games retailer to tender up to $700 million worth of its stock and bring in new board members. Based on Wednesday's stock closing price of $11.20, the proposed tender amount would represent about 61% of the shares outstanding. Hestia and Permit, which combined own 1.3% of GameStop shares outstanding, sent a letter to the company's board sharing concerns regarding the "dramatic underperformance" of the stock. They said they believe a fair value of the company is "at least" $19 per share, which is 70% above Wednesday's closing price. The shareholders urged the company to return a significant portion of its cash, which they estimate to be about $1.5 billion as of the end of fiscal 2018, to shareholders. The stock has tumbled 27.6% over the past 12 months, while the SPDR S&P Retail ETF has gained 1.0% and the S&P 500 has tacked on 2.2%.
PITTSBURGH, March 14, 2019 /PRNewswire/ -- Hestia Capital Partners LP and Permit Capital Enterprise Fund, L.P., who collectively own, together with their affiliates, approximately 1.3% of the outstanding common stock of GameStop Corp. (NYSE: GME) (the "Company"), sent a letter yesterday to the Company's Board of Directors (the "Board") expressing their shared concerns regarding the dramatic underperformance of the Company's stock. In the letter, the long-term stockholders - who are not typically activist investors - called on the Board to engage with them to address the Company's ongoing value destruction by bringing in new and independent Board members and tendering for up to $700 million of the Company's common stock.
Corp. shareholders are threatening a proxy fight, if the videogame retailer doesn’t overhaul its board of directors and take other steps to improve its performance after a sale process didn’t pan out. Permit Capital Enterprise Fund LP and Hestia Capital Partners LP, who have a combined 1.3% stake in GameStop, want the company to refresh its board and boost stock buybacks, according to a letter to GameStop’s board reviewed by The Wall Street Journal. If met with resistance, the shareholders said they plan to nominate a slate of members to overhaul the Texas company’s nine-person board.
Speculation over a possible merger or acquisition of the company has been making the rounds of the market, Briefing.com reported. And call option volume in Take-Two and rival Activision Blizzard (NASDAQ:ATVI) jumped.
Wall Street Weighs In on Gaming Stocks in March(Continued from Prior Part)Take-Two Interactive SoftwareTake-Two Interactive Software (TTWO) has seen a fall of 12.7% this year based on its closing price on March 11. The stock is down 36% from its
Wall Street Weighs In on Gaming Stocks in MarchGaming stocks Gaming stocks are having a mixed year so far. If we consider price action, we’ll see that Electronic Arts (EA) has gained 25.5% YTD (year-to-date) based on its closing price on March 11.
Benzinga has featured looks at many investor favorite stocks over the past week. It was a week that brought news of high trade deficits as talks with China stretch out, as well as disappointments from the Bureau of Labor Statistics and the European Central Bank. As usual, Benzinga continues to feature looks at the prospects for many investor favorite stocks.
GameStop's core business of selling physical copies of video games continues to come under pressure from the rise of digital and online sales of the same games it sells in store, Nagle said in the Friday downgrade note. The company simultaneously faces a new threat from another front in the form of "freemium games," especially "Fortnite," which boasts more than 80 million users, Nagle said.
Warner Bros. and DC Entertainment have released plans for celebrating the 80th anniversary of Batman that will include special theatrical engagements, the milestone release of the 1,000th issue of Dectective Comics, live events and first-ever Batman brand partnerships.
From a technical and fundamental perspective, GameStop (NYSE:GME) stock looks terrible, and that's putting it lightly. In 2019, GameStop stock has dropped 6.5%. But that somewhat modest decline doesn't really tell the whole story.Source: Shutterstock Soon after the new year dawned, anticipation that the embattled video-game retailer would be acquired sent GameStop stock soaring. By Jan. 28, GME stock had delivered over 24% of quick and easy profits to speculators. However, core realities came to the forefront, dooming those who didn't sell GameStop stock quickly enough.Despite strong overtures, management failed to find any interested buyers, and in fairness, it was a big ask. Over the last few years, the company's revenue growth first flattened, then declined. While GameStop offered consumers multiple options at very attractive prices, technology reared its ugly head.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Chinese Stocks to Buy for the 2019 Rebound Video-game streaming and subscription services offered the same services as GME, but with the convenience of in-home purchases. Worse yet, the retailer, which sells Sony (NYSE:SNE) hardware and software, began to view the Japanese company as a rival in the lucrative streaming space.When management finally announced that it's no longer trying to sell the company, it was game over. GME stock crumbled on the news. A little more than a month after the disclosure, sentiment towards GameStop stock remains low.Naturally, high-profile failures like Blockbuster or Sears (OTCMKTS:SHLDQ) come to mind. The increased use of digitalization upended both retailers' core revenue channels. Furthermore, an inability to adjust quickly and effectively compounded the crisis.Blockbuster particularly provides a blueprint for GME's potential impending disaster. With the arrival of streaming companies like Netflix (NASDAQ:NFLX), consumers had no need for the brick-and-mortar entertainment shops that Blockbuster provided. The bears contend that GameStop stock will be another victim of digitalization.However, the situation is not that simple. GameStop Stock Is ComplexI've encountered the arguments about the similarities between GME and Blockbuster for years as GME stock began to tumble. I'm not sure if others have cited parallels between Blockbuster and Sears. Either way, I don't like these or other analogies because they don't quite fit GameStop's outlook.Let's be clear about these cautionary tales. In pretty much all these cases, digitalization utterly replaced physical stores. In the case of Blockbuster, Netflix provided a quicker, more convenient way to obtain the exact same product. Unless you really wanted to get in your car late at night and go to a store where you could encounter homeless people, streaming movies was a better option.Although it might appear that streaming services are also replacing brick-and-mortar video-game stores, that's actually not the case. In fact, I'm going to say something shocking: it's impossible for content streamers to replace GME.Before you bombard me with nasty e-mails, let's look at this logically. Modern gaming consoles like Sony PlayStation or Microsoft (NASDAQ:MSFT) Xbox feature almost lifelike graphics with superb frame rates. To duplicate this enormous data transfer wirelessly is an extremely tall order. That's why I'm not that impressed with Amazon's (NASDAQ:AMZN) foray into video-game streaming.Even if streaming technology evolves to the point where it could handle today's games, guess what? The console-makers themselves will improve their craft. It's simple science: with consoles, you can utilize insane amounts of data with none of streaming's performance-lag issues.And because no one is replacing consoles, I can't jump on the "sell GameStop stock" bandwagon. However, bears might contend that game developers could sell their games directly to the consumer via downloads. But GME can counter with its low-cost, used-games business model.After all, you can't download a used game. GameStop Stock Is Worth a Gamble, But Not Much ElseSo does that mean you should buy GameStop stock? Unfortunately, I can't decisively recommend that move. While I believe that GameStop remains relevant in the streaming era, that doesn't mean that GME stock will become profitable.No matter how you look at it, GME stock is a choppy mess. Investors previously forgave its poor financials because of a possible acquisition in the near-term. With that gone, investors' emotions will weigh heavily on GME stock. That's not a good place to be.However, buying GameStop stock based on speculation isn't a bad idea. I've visited several GameStop stores recently, and they are always abuzz. Of course, you shouldn't place too much emphasis on my anecdotes. However, I also visited Sears' stores before its meltdown, and it was like shopping at a morgue.GameStop just doesn't carry the vibe of an organization facing a crisis. Part of the reason why is because deep down, management knows it still has much to offer.As of this writing, Josh Enomoto is long SNE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Big Data Stocks That Deserve a Closer Look * 7 Best Energy Funds to Outperform the Market * 5 Blue-Chip Stocks Ready to Rise Compare Brokers The post Why GameStop Stock Can Survive the Streaming Revolution appeared first on InvestorPlace.
On its face, Best Buy (NYSE:BBY) looks far too cheap. Best Buy stock trades right at 12x the midpoint of fiscal 2020 (ending January) EPS guidance. Considering Best Buy is growing steadily -- EPS rose 20% in fiscal 2019 -- the multiple assigned BBY stock seems far too low.Source: Best Buy However, I'd say Best Buy stock looks priced about right -- at best. Much of last year's earnings growth came from a lower tax rate. Underlying growth is expected to decelerate this year and that could continue going forward. Cyclical risks are rising, and Best Buy's key suppliers don't necessarily seem all that healthy. The news admittedly isn't terrible. BBY stock hardly seems like a short, and there are worse plays out there, particularly in retail. But there are risks that investors need to monitor. And there are reasons why Best Buy stock looks cheap… because it probably should be cheap. The Case for Best Buy StockThe case for Best Buy stock is relatively simple -- even beyond valuation. Historical performance has been impressive: Best Buy has grown earnings through a combination of underlying growth, share buybacks and a lower tax rate. BBY stock bottomed near $10 in late 2012; six and a half years later, it's returned over 600% including dividends.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * Why NOW Is the Time to Buy Gene Therapy Stocks Competition is essentially nil -- at least in terms of brick-and-mortar rivals. Amazon.com (NASDAQ:AMZN) is an obvious threat. But Best Buy has managed through worries about the "showroom effect" - and outlasted former competitors like Circuit City, RadioShack, and hhgregg. Best Buy is basically the last major retailer standing to serve an enormous market.More recently, Best Buy is coming off an impressive earnings report. Adjusted earnings came in well ahead of consensus expectations. Same-store sales growth of 3% was solid in a quarter where several retailers stumbled and capped an impressive full-year comp increase of 4.8%.Best Buy is a good business with limited competition. The company is executing well -- including driving online sales (up over 10% in fiscal 2019). BBY stock is cheap. What can go wrong? The Risks to BBY StockQuite a bit, actually. There are real risks here and real reasons why Best Buy stock receives a basically zero-growth 12x multiple.Near-term growth is decelerating. After 4.8% and 5.6% comp growth the last two years, Best Buy expects just a 0.5%-2.5% increase in fiscal 2020. Operating margins are expected to be flat -- and narrow, at just 4.6%. The midpoint of EPS guidance suggests a little over 4% growth year-over-year.Best Buy could outperform, admittedly. And at 12x earnings, any growth could suggest upside. A 3% dividend yield helps the case as well. But looking forward, there are two key risks here.The first is that Best Buy has a good deal of cyclical exposure. Spending on big-ticket items like televisions and computers slows dramatically when the macro picture weakens. Best Buy itself saw same-store sales decline a total of 2.5% from fiscal 2009 through fiscal 2011 -- even as competitors were vanishing.If and when the economy turns, Best Buy earnings very well could decline -- and the stock would follow. Even renewed fears of a cyclical downturn can hammer BBY stock: note that shares dropped almost 40% just between early October and mid-December. Is Electronics a Good Business?The second, broader concern for BBY is the health of the electronics space. Prices for many Best Buy products keep dropping. Computing and mobile devices drive over half of sales. Neither business looks particularly healthy at the moment.Indeed, it's worth considering Best Buy's biggest suppliers. 56% of inventory purchases in fiscal 2018 (this year's 10-K hasn't been filed yet) came from Apple (NASDAQ:AAPL), Samsung, HP (NYSE:HPQ), Sony (NYSE:SNE) and Lenovo (OTCMKTS:LNVGY).Apple's domestic sales, particularly of the iPhone, are a significant question mark. At the least, it does look like the ever-increasing prices for the iPhone are going to have to moderate, with the company already cutting prices. HP stock just plunged on a revenue miss. Sony's game business -- the most important to Best Buy -- is struggling as well.The long-term trend for key Best Buy categories is for pricing to stay flat at best. With operating margins under 5%, Best Buy earnings don't have much room for pricing compression.In that context, a 12x multiple seems reasonable -- and maybe a touch expensive. Cyclical pressures will show up at some point. Even a cursory look at key suppliers shows that secular pressures already are here. The long-running benefit of dying competition is fading, with only GameStop (NYSE:GME) left to cede sales. * 7 Chinese Stocks to Buy for the 2019 Rebound Clearly, there are risks here for Best Buy stock. From here, those risks suggest that BBY stock could be -- and should be -- even cheaper.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Big Data Stocks That Deserve a Closer Look * 7 Best Energy Funds to Outperform the Market * 5 Blue-Chip Stocks Ready to Rise Compare Brokers The post Best Buy Stock Should Give Back Its Gains appeared first on InvestorPlace.
Investors cheered the news, sending GameStop stock (GME) up about 2% on Tuesday morning as the broader S&P 500 index was largely flat. GameStop, which sells videogame hardware and software, has a one-year return of minus 22%. The retailer recently completed a review of its strategic options that “did not result in the company being taken private as some expected,” according to a note by Loop Capital Markets.
Target, Kohl’s, Salesforce and GameStop are some of the companies with shares expected to trade actively in Tuesday’s session.