Video game software companies have shaken the pandemic of the selling pressure and negotiation are relatively close to bull market highs posted in 2018, with a home stay with the orders around the world, giving the game industry a boost. The expected date of the introduction of a new generation of game consoles in the fourth quarter, supported this increase as well, adding to the buying pressure after a long period of apathy.
The research firm NPD has reported that spending on video game hardware, software, accessories, and cards, the impressive increase of 35% year over year in March 2020 at $ 1.6 billion. This is in contrast with the months of January and February, decreases of 26% and 29%, respectively, highlighting the positive impact of the house-the temporary workers, with a lot of time on their hands. Even the consoles saw a huge jump in the sale, even if the current versions are almost at the end of life.
Some doubts have been raised about the console release dates for the first quarter, with the pandemic of put a lid on the software developer conferences and trade shows that are necessary to provide a deep catalog of new games. However, the Microsoft Corporation (MSFT) and Sony Corporation (SNE) have held their ground, the promotion of launches of the XBox series, X-Series and PlayStation 5 in November or December, just in time for the 2020 holiday season.
Activision Blizzard, Inc. (ATVI) beat the first-quarter 2020 is estimated, in a May 5, for the publication of the results, to guide both second quarter and fiscal year 2020 metrics above the consensus. The stock has broke above the 2008 resistance at $19.28 in 2014, and has entered a strong upward trend, which has posted a record high of $84.68 in October 2018, ahead of a sharp blade to a two-year low, just above$ 40. It has been trading in this range for the past 14 months, gaining ground in a complex recovery wave.
The rally has now reached a resistance at the .786 Fibonacci sell-off of the retracement level of the mid-$70, increasing the chances for a pullback could find support at the .618 retracement in the upper part of $60. The balance volume (OBV), the accumulation-distribution indicator reached an all-time high in September 2019, but has struggled to clearly that the peak of the past eight months. This could change after the console manufacturers to finalize 2020 release dates.
Take-Two Interactive Software, Inc. (TTWO) report gains of 20 May. This stock has been reserved, the group’s strongest performance since the break above the 2005 high of $29.60 in 2015. The rally reached a record high of $139.91 in October 2018, leaving room for a major decline that found support at 16-month low in February 2019. The subsequent rebound reversed only four points under resistance in August, producing a narrow range-bound action in February 2020 ventilation.
A March reversal gained strength at the beginning of the month of April, going back broken support before stalling within a point of the peak in August in Tuesday’s session. The stock is now mounted on the .786 sell-off of the retracement level, increasing the chances of a pullback held the support in the middle of$120s and the performance of a final assault on the 2018 high. OBV cooperates with this bullish effort, the lifting of course the highest since January 2018.
Electronic Arts Inc. (EA) beat the fourth quarter of 2020, earnings and revenue estimates in a May 5 release, but lowered 2021 orientation. This manufacturer is very dependent on the sport games like “FIFA” and “Madden NFL,” but these sites have been closed indefinitely due to the pandemic. As a result, it is not surprising that this stock is the weakest of the three major gaming companies, trading just above the middle of 2018 wide trading range.
A multi-year uptrend topped out at $151.26 in July 2018, which gives a strong decrease, followed by a rebound that has mounted the .50 sell-off of the retracement level a month ago and stuck on. Even if in the short term pattern seems bullish, suggesting that the stock will generate additional upside that fills the month of August 2018 gap of$ 129. However, the OBV fell to a five-year low during the first quarter of the rout and has barely budged since this time, telling investors to lower expectations.
The Bottom Line
Video game stocks have recovered from first quarter losses and could test bull market highs in the coming months.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.