As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q4. Today, we are looking at video gaming stocks, starting with Roblox (NYSE:RBLX).
Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
The 4 video gaming stocks we track reported a weak Q4; on average, revenues missed analyst consensus estimates by 17.7%, while next quarter's revenue guidance was 11% below consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and video gaming stocks have had a rough stretch, with share prices down 10.4% on average since the previous earnings results.
Best Q4: Roblox (NYSE:RBLX)
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Roblox reported revenues of $749.9 million, up 29.5% year on year, falling short of analyst expectations by 30.4%. It was a slower quarter for the company, with a miss of analysts' revenue estimates.
“We finished 2023 with another strong quarter of growth as we continue to drive innovation and new experiences across the Roblox platform. We enter 2024 with even more conviction of being able to achieve our long-term goal of attracting over 1 billion daily active users with optimism and civility. We continue to benefit from the strong network effects in content, social connection, and communication, as well as our investments in immersive experiences, advertising, and AI,” said David Baszucki, founder and CEO of Roblox.
Roblox pulled off the fastest revenue growth but had the weakest performance against analyst estimates of the whole group. The company reported 71.5 million daily active users, up 21.6% year on year. The stock is down 12.4% since the results and currently trades at $35.55.
Is now the time to buy Roblox? Access our full analysis of the earnings results here, it's free.
Take-Two (NASDAQ:TTWO)
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Take-Two reported revenues of $1.37 billion, down 2.9% year on year, outperforming analyst expectations by 2.2%. It was a weak quarter for the company, with slow revenue growth and underwhelming revenue guidance for the next quarter.
Take-Two pulled off the biggest analyst estimates beat among its peers. The stock is down 16.7% since the results and currently trades at $141.31.
Is now the time to buy Take-Two? Access our full analysis of the earnings results here, it's free.
Weakest Q4: Skillz (NYSE:SKLZ)
Taking a new twist at video gaming, Skillz (NYSE:SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.
Skillz reported revenues of $29.14 million, down 37.8% year on year, falling short of analyst expectations by 23.5%. It was a weak quarter for the company, with a decline in its users and slow revenue growth.
Skillz had the slowest revenue growth in the group. The company reported 137,000 monthly active users, down 41.7% year on year. The stock is down 5.5% since the results and currently trades at $6.05.
Read our full analysis of Skillz's results here.
Electronic Arts (NASDAQ:EA)
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Electronic Arts reported revenues of $1.95 billion, up 3.4% year on year, falling short of analyst expectations by 19.1%. It was a weak quarter for the company, with a miss of analysts' revenue estimates and slow revenue growth.
The stock is down 7.1% since the results and currently trades at $127.77.
Read our full, actionable report on Electronic Arts here, it's free.
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