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Take-Two, Activision Propel U.S. Game Developers To Record $135 Billion Market Value

Sep 2
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The global shift indoors due to lockdowns necessitated by the coronavirus pandemic has changed consumer retail spending and entertainment lifestyles. Not only have digital retailers the likes of Amazon and communications services providers the likes of Zoom witnessed meteoric rises in their market capitalization and service demand, but gaming companies too have seen their fortunes rise as entertainment options available to populations stuck indoors reduce.

To that end, a new research report from DFC Intelligence that analyzes share values and market capitalizations of the four major U.S.-based gaming companies is out and it makes some startling reveals that highlight the extent of which market confidence in these companies has grown.

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Activision Blizzard, Electronic Arts, Take-Two Interactive and Ubisoft's Cumulative MArket Caplitaliation Grows By 43% In Six Months Leading To September a

The four companies that are the part of today's analysis are Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA), Take-Two Interactive (NASDAQ:TTWO) and Ubisoft (OTCMKTS:UBSFY). While Ubisoft is headquartered in Europe, today's report cites the fact that since the bulk of the developer's revenues originate from the U.S., it is pertinent to include it in the list.

Full details of the report require payment for access, so we'll have to conduct our own analysis alongside the conclusions presented by the research firm. Share prices and market capitalization for the four companies at the end of February and end of August stood at:

 Share price at market close on 28 February, 2020 ($):Market Capitalization:Share price at market close on 31 August, 2020 ($):Market Capitalization:% Change:
Activision Blizzard - ATVI:57.754583.526544
Electronic Arts - EA:101.3729139.474038
Take-Two Interactive - TTWO:107.4812171.192067
Ubisoft - UBS14.96916.41011
Cumulative:9513542

As visible above, Activision Blizzard is the company that benefitted the most from increased gaming in the six months between February and September. The company's market capitalization grew by 44% during the period and stood at $65 billion at the end of last month. Yet, NASDAQ: ATVI did not lead in growth percentage, with this title belonging to Take-Two Interactive, as the company's value grew by a whopping 67% for the time period under study.

Ubisoft's troubles are also apparent from the data shown above, as the company deals with release delays and employee resignations. Even as it put up record earning results during the quarter that ended in June, the developer has been at the center of misconduct allegations that have persisted throughout the course of this year. Back catalog purchases and microtransactions during the quarter resulted in the company being able to earn €410 million through bookings, as it surpassed its own estimates by 25%.

Take-Two Interactive's meteoric share price movement shown above. Image: Koyfin

Take-Two's Market Capitalization Grows By 67% Between February and September

GTA V's publisher Take-Two Interactive saw a flurry of price target increases early last month after the company posted its earnings results for the first quarter of the fiscal year 2021. During the three months, the developer earned $831 million in revenue which marked for 54% year-over-year growth and $996 million through net bookings which marked for a whopping 136% year-over-year growth. It also revealed that 65% of net bookings were through recurrent consumer spending, in a metric that demonstrated the strength of the company's platforms.

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The rise in Take-Two share price during the six months between February and September can also be explained due to the strong performance it has demonstrated from increased demand for indoor entertainment options. This demand was also reflected in the earnings call, where the developer raised its earnings-per-share estimates for the current fiscal year. These estimates, which previously sat in a range of $2.60 - $2.85 were upgraded significantly to $3.04 - $3.30 and following the release, Take-Two's share price jumped by more than 5% on the open market.

More importantly, the upper value of the updated range was marked by Wall Street analysts as being conservative, with their own estimates pegging EPS for FY21 at $3.91. The flurry of price target upgrades that followed the earnings call reflected this optimism, with analysts basing their upgrades on demand uptick, conservative guidance, elevated franchise growth and recurrent consumer growth guidance, with recurrent growth guidance also being taken as a sign of nearly all of the company's future growth being priced in.

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