GameCo Stocks Take a Wall Street Beat-down

October 10, 2008 -

Thursday was another bloody day on Wall Street and stocks of video game publishers did not escape the carnage.

As reported by GameSpot,  the likes of Activision, THQ, EA and Take-Two have seen their share price drop between 28-40% in recent weeks:

Worst off is Take-Two Interactive, which has lost 40 percent of its share price in a month, going from $21.77 to $13.01. Besides overall market woes, the decline was also in large part due to Electronic Arts' abandonment of its Take-Two takeover bid, which was $26 per share at its highest point...

 

Despite the apparent game-industry-wide drubbing, analysts are confident the game industry will fare better in a recession than other sectors. "If people aren't traveling and stay home, what are they going to do? They'll want relatively cheap home entertainment," David Gibson, senior analyst at Macquarie Research Equities, told the Wall Street Journal. "[And] core gamers will buy the titles when they come out, regardless of economics."

GP: If you're a T2 shareholder, we've gotta wonder how you're feeling about passing on EA's 25.74 takeover offer.


Comments

Re: GameCo Stocks Take a Wall Street Beat-down

I guess the next EA tender offer will be for 1 dollar per all shares combined...

Re: GameCo Stocks Take a Wall Street Beat-down

"[And] core gamers will buy the titles when they come out, regardless of economics."

Heck yeah!

Re: GameCo Stocks Take a Wall Street Beat-down

I wonder if it will reach the point where people start throwing themselves off buildings again.

I was rather sad I missed that the first time; it'd be good for a laugh.

Re: GameCo Stocks Take a Wall Street Beat-down

Take 2 knows either way EA will own them sooner rather than later.

Re: GameCo Stocks Take a Wall Street Beat-down

One can hope that the EA price will drop so much that it would be a likely takeover target for someone like Mr. Gecko or better yet, a group of independent privately held developers. Dreams.... We must have them, Yes?

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"The most difficult pain a man can suffer is to have knowledge of much and power over little" - Herodotus

--------------------------------------------------------------------------- "The most difficult pain a man can suffer is to have knowledge of much and power over little" - Herodotus

Re: GameCo Stocks Take a Wall Street Beat-down

GP: If you're a T2 shareholder, we've gotta wonder how you're feeling about passing on EA's 25.74 takeover offer.

Considering that the offer was tender before the recent downturn, and wouldn't have been finalized before it, the real question is whether the deal would have been stymied by the market even with an agreement.  In plastics, many deals have been either delayed, or nixed by the market's woes.

http://www.plasticsnews.com/subscriber/headlines2.phtml?id=1223589386

for example.  The article I linked details how one capital improvement is being delayed.  This is compareable to EA's attempt to buy TTWO, as TTWO's IP is certainly 'game capital.'  I hope you all can read it, but PN is wonky about subscribing.  In short, the article details how many auto manufacturers are delaying buying equipment and research into new materials to build lighter, gas efficient cars because of both the credit crunch and the market downspike.

I think this game stock downturn just shows how naive the idea that the game industry is recession-proof.

~~All Knowledge is Worth Having~~

UGH.  Please ignore the troll and have an adult conversation for once, please.

~~All Knowledge is Worth Having~~

Re: GameCo Stocks Take a Wall Street Beat-down

"I think this game stock downturn just shows how naive the idea that the game industry is recession-proof."

Not necessarily. Right now everything is crashing and burning in a panic selling. I'd say wait a few months and see how the game industry is doing then, before declaring proof that that the idea of it being recession-proof is completely naive.

-Gray17

Re: GameCo Stocks Take a Wall Street Beat-down

No, the fact is, that during other downturns in the 80's and mid 90's (although on a different scale), the game companies remained above the fray, which led to the assertion of 'recession-proof.'  The  game stocks' current mirroring of the market shows A) How mainstream the game industry is (from a big business standpoint) and B) The hardcore gamer market that kept them solid in the past isn't enough to bouy them during this remarkable period of turmoil.  What's naive is the assertion of 'recession-proof' being tossed about very recently, when it's never been a big enough player to be truly tested.

And I'm convinced this sell off was bound to happen, and any kind of meddling by the Fed just prolonged the problem.  Also, the notion that home values will always increase is flawed at a fundmental level, and that idea still prevades the curent market.  People need to realize that home ownership is more economically sound not (only) because you can theoretically sell your home for a profit, but because that even selling your home for a solid amount less than what you purchased it for is a better investment than pissing away even half a mortgage payment in rent for the same period.  Look at real estate listings and compare them to county assesments.  (I've been in the market, so I've been doing this)  People are still trying to sell (for example) an $80,000 house for $110,000 and crying because they are being pushed to sell for closer to $90k (which is what they paid for it a few years back.  My research is limited to Western PA, so it might not hold true overall, but my company does business all over the country, and I've talked to enough people in different parts of the US to be able to fairly confidently say you could extrapolate this across the market.

And thanks for the reply, I appreciate the adult level of converstaion.

~~All Knowledge is Worth Having~~

~~All Knowledge is Worth Having~~

Re: GameCo Stocks Take a Wall Street Beat-down

I Think you make good points, but the term "recession-proof" no longer seems to be valid anyway since economic conditions of this (relative) magnitude hasn't been seen since the '20s. We are not in a recession anymore, so even if you were to accept the assertion that games are "recession proof" that term would likely have no meaning in a depression.

Also, as an owner of T2 stock, yeah it blows. But I am a faily recent investor (Last summer, before GTAIV hype really got into full swing) and I recognize it as a long term investment. I think when the market eventually swings back T2 and all the other game companies will recover to their previous positions, and possibly continue to grow. There was a good reason Activision Blizzard offered a stock split despite early economic tremblings. Analysts, investors, and the general (informed) public still expect the gaming industry to continue to grow (just maybe less than in normal conditions). Just because the rest of the stock market managed to drag down game companies with them doesn't mean the gaming industry won't still experience growth. It may not be as much as the record breaking previous years, but growth is growth.

Re: GameCo Stocks Take a Wall Street Beat-down

Economic recession proof, not economic depression proof ;)

"Volume helps to get a point across but sharp teeth are better."

"Volume helps to get a point across but sharp teeth are better."

Re: GameCo Stocks Take a Wall Street Beat-down

I sold my TTWO stock at $27, because I knew Zelnick was overvaluing it.  Gee, maybe I can buy my own Bar with the proceeds!  Jack Thompson

ATTENTION, GAMER IDIOTS! HUGE STORY ABOUT TO BREAK REGARDING SAINTS ROW 2, COURTESY OF JACK THOMPSON, ATTORNEY. YOU’RE WELCOME, KIDS!

Re: GameCo Stocks Take a Wall Street Beat-down

I'm taking a copy of these comments and sending them on to the FTC for evaluation of possible Insider Trading.

I suggest you get a lawyer to represent you Jack.

"Volume helps to get a point across but sharp teeth are better."

"Volume helps to get a point across but sharp teeth are better."

Re: GameCo Stocks Take a Wall Street Beat-down

Good for you. HEY EVERYONE, CHECK OUT THE MILLIONAIRE!

---You are likely to be eaten by a Grue.

---You are likely to be eaten by a Grue.

Re: GameCo Stocks Take a Wall Street Beat-down

I doubt $54 will buy you that much...

Re: GameCo Stocks Take a Wall Street Beat-down

He might be able to get a DS and a copy of Phoenix Wright. Then he can say he's an attorney and it'll be true.

---You are likely to be eaten by a Grue.

---You are likely to be eaten by a Grue.

Re: GameCo Stocks Take a Wall Street Beat-down

I was just talking about the (relative) resilience of the gaming industry with my family last night.  Considering the bang-for-your-buck factor, I think games are still one of the better entertainment choices.

Bars, movie theatres, and the like are the areas I think are going to be hit the hardest.  Not that we aren't going to feel it at all, but I think we're getting off better than most.

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