Wall Street lines gutter with game stocks

  • By Curt Feldman, GameSpot
  • Posted May 16, 2006 5:45 pm PT

EA, Atari wake up to an E3 hangover; Madden maker sinks to 52-week low, and it's still too pricey for one high-profile stock picker.

Electronic Arts at 43 bucks and change. Is it a bargain worth buying or a stock to avoid?

As recently as three weeks ago, shares in Electronic Arts were trading above $57. But the industry's biggest publisher woke up two business days after the Electronic Entertainment Expo to one of the nastier hangovers on Wall Street. Hitting a 52-week low and closing at $43.28 today, ERTS is the most noteworthy of game stocks that have generally flopped over the course of the last few weeks.

Activision also suffered through the past week, which must have smarted that much worse given the jolt investors gave its share price the week before. Then, investors were reacting favorably to news that the publisher had picked up the James Bond license from EA. The day after the news was announced, Activision shares hit a high of $15.11 in intra-day trading. Today, the stock lost pennies to close at $13.22.

Take-Two also showed the blemishes of a tough month--the stock closed above $17 May 1. Today, shares of the company barely made it above $15.

So is Electronic Arts, at a 52-week low, right for buying? The Street's James Cramer thought no, advising a caller on his radio program yesterday that the company's slowing growth rate makes it an expensive stock, even at $43.

Checking in with a different perspective is Wedbush Morgan analyst Michael Pachter who sees potential in the stock. "There's just a lot of pessimism about the cycle," Pachter told GameSpot. "Nobody is saying anything good right now."

Is he a buyer of the suddenly slumbering Electronic Arts? "I would be a buyer here," Pachter said. Elaborating further, he predicted the stock would hit 60 within the next year.

Rounding out the day was Atari, off 3 cents to $.71, Midway was up 2 cents to $9.62, THQ was off 7 cents to $23.08, and Take-Two was off 8 cents to $15.02.

44 Comments

  • Nawras

    Posted May 19, 2006 4:27 am PT

    This is what happens when you stink at E3

  • rodrigo_br

    Posted May 17, 2006 4:15 pm PT

    what can i say?
    i know EA ruins(to don't use other words) most of the games franchises that it buys...
    but its the bigger publisher and we can't live without some of the games EA has...
    so, EA will recover one way or another, EA goin' broke it's sort of the same as Microsoft Goin' broke, it's almost impossible...
    so, wait a bit...
    -Easy money cheat:
    when you see that the company is starting to grow again, buy as much as you can, then keep the shares you'd buy...
    when you think that's time to make money, sell them all, and hope that the other buyers will sell too...
    so the shares go down again, repeat this and you'll get easy money. NOTE: as more you buy, as more you get...
    hehe
    as long as we have the other publishers like Take Two, Sony and all the people who want to see EA broke, we'll be fine...
    specially cuz' if EA goes broke, the right of all it's games will end up being sold...
    if you like NFS , don't worry if EA goes broke, someone will buy the rights for the game and produce it
    hehe
    remeber to use the easy money cheat...

  • Sango_Fighter

    Posted May 17, 2006 4:13 pm PT

    The smart choice for the year is to buy Gamestop (GME) cause they will be the winner of the console wars. Plus a good chunk of their revenue is based on "trade-in" games.

  • mrjasler23

    Posted May 17, 2006 1:51 pm PT

    quietguy is right, no matter if EA makes crappy games or puts there name on good games.. they will still be around ... they will still have a good business. Doesn't matter what you guys think.. the general public will buy anything that is marketed well, thats the essence of EA's business. If you released games that satisfied just the hardcore gamers like yourselves.. the company will go out of business. Blizzard are doing well.. but they aern't really growing.. they are happy to release their game every few years.. thats not good enough for the business world.

  • quietguy

    Posted May 17, 2006 1:14 pm PT

    Truth is to all you fellow gamers still living the electro-wavic illusion that you all see when you sit on your computers is: EA will not be going away for a long time soon anyways. They are perfectly fine where they are amidst stock drops and crappy games. You tell me, you care for games but does the other 50 million casual gamers out there care for quality? Does the board of large stock holders care for the quality as long as they're getting their money? Does the executives care for the games itself as long it meets a balance between profit and customer satisfaction? Does the... You see where I'm going here? We live in a society of absolute, public ignorance. Anything that happens in video games, stays on the game level. (With the exception of scandals and ethical problems ie. Hot Coffee Mod and the Angry EA Spouse case) Many things that happens on the social levels tends to outstrip the impact of quality in video games. Why talk argue about the quality of video games when the quality of government action is at an all time crap? What I'm saying is that EA meets every marks required to survive in the business world; even though its games are crappy. BUT that's just substance gone array when it's logos is being stuck on very well made games. How the hell that happened? Simple, it saw a good opportunity and took it. Hell, if Apple was going out of business, would Microsoft buy the company?

  • enoslives7

    Posted May 17, 2006 12:24 pm PT

    EA is a bunch of crooks who are trying to monopolize sports games. I hope they go belly up. PS3 rules !!!!!!!!!

  • spidey008

    Posted May 17, 2006 10:53 am PT

    Buy..Sell...Buy...Sell...I don't know?

  • faridmon

    Posted May 17, 2006 10:30 am PT

    u are right fenriz275
    when was EAs last good game yeah bournout 3 and thats was 2 years ago and its not even from EA, its from criterion, ok lets try again, when was EAs last good game, yeah it was freedom fighters about 4 years ago, thank a lot EA for ruin the game industry, and atari, am not suprised, even though dragon ball games were alright but last game from them that was a AAA title was UT 2004 and it was 3 years ago.

  • mrjasler23

    Posted May 17, 2006 9:13 am PT

    I don't think people in general look at an EA logo on a game box and think it will be mediocre, just you guys who are obsessed with Blizzard and Valve etc.. Look at Battlefield Modern Combat, has an EA logo.. I bet alot of you picked that game up? how about the new game from Crytek, Crysis? your not going to pick that up because it has an EA logo?

  • Hellisunreal

    Posted May 17, 2006 9:07 am PT

    stuff like this happens, have 2 roll with the punches

  • chrisdojo

    Posted May 17, 2006 8:41 am PT

    i'm avoiding any game stock. even if publishers start making some $$$, all those analysts and traders give them bad wraps.

  • yung_joc

    Posted May 17, 2006 7:29 am PT

    EA is a great company but them lossing stock is because they didnt do so well at E3 .

  • theKSMM

    Posted May 17, 2006 5:37 am PT

    To Manatassi: I agree for the most part, but you can't ignore the fact that the industry has built up a huge pool of expertise and talent on the current generation systems. They'll try to milk that cow for as long as they can while they try to get up to speed on the next generation. Plus a user base of more than 10 million active gamers is too hard to ignore, and probably will be for several more years. In the meantime, some developers will show that they can still make the old dog do some great tricks (a la God of War) while horrible ports like Ghost Recon: Advanced Warfighter convince gamers that it's time to upgrade.

  • Manatassi

    Posted May 17, 2006 2:58 am PT

    trancejeremy:

    The catch is if they take that method of games production and only suport last gen consoles instead of the new generation of hardware then they are going to destroy their market. The PS2 has reached its limits as a hardware format and if they dont push the next generation of hardware people are going to stop playing console games and move on to PC games instead. Hek it barely costs anything to get a PC that will run PS2 standard graphics.

    This is a transition year and thats all there is to it PS2 only has such a large user base because it has been out for years. It is necesary to go through the transition otherwise the market will colapse in the long run, the last gen has run its course and people cannot continue to push the boundries of games on that hardware.

  • SteelSamurai101

    Posted May 17, 2006 2:22 am PT

    Atari at 71cents, hahaha. Hardly surprising considering they almost exclusively sell utter crap.

  • thekey

    Posted May 17, 2006 1:26 am PT

    This does not suprise me.

  • soul_motor

    Posted May 17, 2006 1:09 am PT

    Madden will pick up the numbers, I'd say it's a hold.

  • trancejeremy

    Posted May 16, 2006 11:06 pm PT

    The trouble is, most companies have simply stopped making anything but medicore games, low-ish budget games. They are afraid to continue to support the current gen consoles with big budget titles, but the user base of the newer ones is basically non-existant. And in some cases, they do still put a major title on other systems (like GRAW), but don't spend the money to do it right.

    So basically, they are ignoring 70 million PS2 owners. Sure, maybe 5 million have 360s. But what about the other 65 million? Aren't they interesting in buying games? If you don't make a product, of course you can't sell it.

    As an example, look at Take two. They could have put out another GTA game for this generation ( a real one, not the LCS/VCCS PSP ports) which would have been out this summer. It would have sold millions. But hey, they'd rather make one for next year, despite it costing a ton more money to develop, and selling to a much smaller user base. Is it any wonder they are losing money?

  • fajitaTomorrow

    Posted May 16, 2006 10:44 pm PT

    People hate EA because of the position they are in, and the fact that they take advantage of it. That is a perfectly valid reason. No one here cares what 2k would do, but they would hate 2k if they had EA's history too. It's not "personal", it's the consumer's perspective on an entertainment industry.

  • fenriz275

    Posted May 16, 2006 10:41 pm PT

    I think it's a reflection of these publishers putting out a lot of really mediocre games. To a gamer a name like Blizzard means quality but when I see an EA logo on a game I usually avoid it. EA used to release good games but now they seem to publish a lot of crap. The other game companies seem to follow EA's lead so it's wall to wall crap. Gamers won't buy bad games. If more companies followed Blizzard's example and concentrated on quality then they'd have better sales and better stock prices. Also, wasn't the stock market down across the board?

  • SuperH75mil

    Posted May 16, 2006 9:18 pm PT

    You said it, DLUX. Anyone who's seen Cramer's show even in passing knows how much of a bull he is, and how much he (previously) liked the game market.

    Therefore, he must really see a continuing down-trend in E.A.'s share prices, so much so that even HE wouldn't buy them.

    Plus, Cramer's hilarious. The Wedbush Morgan guy, from what I read in the GS news blurbs, seems like a pompous prick. He can go **** himself. Not that it's any way to pick which analyst to listen to (and of course, most analysts are crackpots anyways), but it's funny to say so.

    In any case, E.A.s probably not going to experience a revitalization unless the PS3 solidifies its console market share.

  • NeoJedi

    Posted May 16, 2006 9:15 pm PT

    Oh well, it can't all be good news I guess.

  • nemes1s3000

    Posted May 16, 2006 8:26 pm PT

    Roll on the summer gaming indeed.

  • mr_montoya85

    Posted May 16, 2006 7:42 pm PT

    I HATE HIM. I GAVE HIM MONEY EVERY TWO WEEKS FOR THE PAST TWO YEARS!!!!! HE STOLE MY MONEY.....no wait ...that was taxes, oh thank god, nevermind. lol

  • themyth01

    Posted May 16, 2006 7:35 pm PT

    hmm... Atari, stock splits... a company may lower the price of its stock shares if it so desires. Would have to check EA financial statements to estimate future performance but I think it'll do well considering it's so huge in the gaming market, with games for the next-gen consoles it'll be up in profits probably by next year.

  • mrjasler23

    Posted May 16, 2006 7:33 pm PT

    here we go.. the EA haters... i've been waiting a while to get the chance to post a message on this site.. what you gaming nerds that post here thinking they know it all don't realise is.... that any game company in EA's position would do the same thing as EA. If 2k games had control of the sports title market they would do the same thing and go exclusive and try to put EA out of business. The fact is, like it or not... all games publishers are the same.. they are on the stock market and they have to answer to their investors... If EA are not aggressive like they are.. they will go out of business... just like Atari are. It's a dog eat dog world whether you like it or not.. as much as you want to think it's all about creating great games.. the fact is that is a small part of the whole picture.. in reality it's about making money. 2K games bought the exclusive rights to the MLB license, you don't see anyone bagging them about it do ya? if EA hadn't bought the NFL license, 2K games were going to... thats a fact.. so then you would be playing just one game anyways. If EA were not in this industry .. there would be no industry... thats a fact! as much as you bagg them, they helped this industry grow and get to where it is today.

  • DLUX85

    Posted May 16, 2006 7:17 pm PT

    If Jim Cramer says don't buy on EA, that means no buy. It probably will slip a little more, but later this year EA should be back up to the mid 50's easy.

  • espme

    Posted May 16, 2006 7:16 pm PT

    EA can go to HELL! They are going to ruin the game industry.No company should have a 25% share of this business.Their football game sucks so bad,they had to BUY OUT the exclusive rights because their competition was too fierce.Ironic that sports games are losing competition isn't it.

  • AoNHagen

    Posted May 16, 2006 7:03 pm PT

    EA is Evil

    They have drestroyed some of my most loved franchises.

    Specially C&C

  • mrjasler23

    Posted May 16, 2006 6:59 pm PT

    If you look at the NPD game charts for the year, you will notice EA totally dominate the market, as much as people diss EA ,any other game company would love to make the money EA are at the moment.. EA just don't have much growth because they are already so big.. It's similar to companies like microsoft who are already so large that it's hard to get bigger. It's not like EA are making bad games.. that's not the reason.. clearly it's not because they consistently have 4 or 5 games in the top 10 sellers. EA have enough in the bank to buy ubisoft or taketwo etc.. I don't see them going downhill from here on... the rich get richer, thats the way it is.. their investment in next gen technology will start to be fruitful once ps3 comes out.

  • Lauryn2000

    Posted May 16, 2006 6:36 pm PT

    I'd hold off awhile to buy shares of EA might sink a little lower.

  • superjoeldude

    Posted May 16, 2006 6:16 pm PT

    Dude, the "big guys" losing money doesnt mean any little guys will get a chance; its just too expensive for little guys to make a decent game on the modern systems, unless the graphics and physics are horrible.

  • bulldog7

    Posted May 16, 2006 6:13 pm PT

    oh well. ya summer is going to suck for games

  • A7Xfan

    Posted May 16, 2006 6:10 pm PT

    Summer gaming drought only for some...
    Its great though that the giants aren't immortal, we need many smaller business with lots of ideas and potentially risks. Gaming wears faster then a movie so you can't put a coat of paint over a 10 year dead franchise like you can in the movies. You need to expand and innovate upon ideas.

    Big business struggling is great as long as the little guys are doing well.

  • comthitnuong

    Posted May 16, 2006 6:09 pm PT

    they got dissed...im on the first page!!

  • XtReMeGaMeR4eVa

    Posted May 16, 2006 6:04 pm PT

    lol when I worked at EA I was amazed that they considered it a failure when they made 16 million dollars in profit that quarter. Still that Atari stock is embarassing.

  • DLUX85

    Posted May 16, 2006 6:00 pm PT

    Do a 'mon back while it's still low!!

  • billigloo

    Posted May 16, 2006 5:59 pm PT

    [This message was deleted at the request of the original poster]

  • dchispirtle

    Posted May 16, 2006 5:57 pm PT

    wow...Atari stock is only $.71 a share. That's freaking insane. I'd hate to own even a single share of that.

  • maxsteel86

    Posted May 16, 2006 5:56 pm PT

    Hmmm EA's stock is way higher than everybody else's... worrying

  • killakb

    Posted May 16, 2006 5:55 pm PT

    mention sony's decline last few days.....like you guys were gloating when

  • Schillinger

    Posted May 16, 2006 5:55 pm PT

    Well you both have Wind Waker avatars I guess...

    Roll on the summer gaming drought!

  • patd23

    Posted May 16, 2006 5:53 pm PT

    [This message was deleted at the request of a moderator or administrator]

  • ZeldaMaster32

    Posted May 16, 2006 5:53 pm PT

    [This message was deleted at the request of a moderator or administrator]

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