Why Gaming Stocks Are Plunging After mobile game developer Zynga (NASDAQ:ZNGA) reported poor quarterly results, the stock plunged from a $9.00 resistance level. China’s crackdown on gaming did not help the sector. The country will limit weekly gaming hours for teens.
In the last quarter, Zynga cut its full-year sales guidance. It blamed the delayed release of FarmVille 3 to Q4 as a headwind. The firm forecasts full-year bookings down 3% from its previous guidance, to $2.8 billion.
Activision (NASDAQ:ATVI) appears untouchable after the SEC will probe into its practices. After sexual harassment claims, unfair compensation plans, and a toxic workplace, Activision is getting negative media coverage. The union filed a federal complaint with the National Labor Relations Board.
Activision may have hot game titles like Madden and Warcraft. But retaining talented staff and treating them well is critical to the firm’s growth.
Electronic Arts (NASDAQ:EA) stock also broke down from the trading range of $140 - $145. The firm paid AT&T (NYSE:T) $1.4 billion for Playdemic. This will add the gaming hit Golf Clash to the lineup. EA must enhance the value of the acquisition to benefit shareholders. If it shutters and closes it, then shareholder valuation worsens.
Gaming stocks are out of favor. Avoid them until all firms mentioned demonstrate revenue growth in the next quarter.
