Market freefall drags down game stocks

By Tor Thorsen, GameSpotPosted Sep 29, 2008 3:59 pm PT

Publishers not immune from biggest one-day Dow Jones Index drop in history; EA, Activision Blizzard hit in US, Ubisoft clobbered overseas.

Though the US economy has been listing during 2008, analysts have been touting game stocks as a safe bet. In a May online column for the financial weekly Barron's, Signal Hill Capital Group Senior analyst Todd Greenwald called the game industry "virtually recession-proof." In a piece aired last week, National Public Radio said games' are growing more popular because they offer cost-effective escapism, much like films did during the Great Depression.

Unfortunately, today's massive market loss affected even the most prosperous of publishers. As the Dow Jones industrial average shed a whopping 777.68 points (6.98 percent)--the biggest one-day point drop in history--the NASDAQ composite index was also clobbered, falling 199.61 points, or 9.14 percent.

Given that all US game publishers are traded on the NASDAQ, it was unsurprising that they, too, were down across the board. The share price of Activision Blizzard (World of Warcraft, Guitar Hero World Tour), the newly minted biggest third-party publisher on the planet, slid 13.8 percent ($2.26) to end the day at $14.12. Former top dog Electronic Arts (Madden NFL 09) saw $3.63 shaved off of its stock price, ending the day down 9.16 percent at $36 even. THQ (Saints Row 2) lost 7 percent, or $0.87, to close at $11.48, and shares in Take-Two Interactive (Grand Theft Auto IV) lost 4.52 percent ($0.73) to close at $15.43--nearly $10 less than its asking price one month ago.

Large multinational companies with large game components also suffered. Software giant and Xbox 360 maker Microsoft (Gears of War 2) saw 8.72 percent ($2.39 per share) of its multibillion-dollar market value vanish in a single day, closing at $25.01. On the New York Stock Exchange, PlayStation 3 manufacturer Sony Corp (Resistance 2) shed 5.09 percent ($1.65 per share), ending trading at $30.76.

But though today's losses in American markets came after the US House of Representatives voted down a $700 billion bailout bill, some game companies overseas were flagging even before the legislative decision. Worst hit was Paris-based Ubisoft (Assassin's Creed), which lost a whopping €12.47 ($17.92) per share in just hours, closing at €45.50 ($65.37) on the Euronext market. Eidos Interactive parent SCi Entertainment (Tomb Raider Underworld) lost £3.75 ($6.75) on the London Stock Exchange, ending the day at £26.75 ($48.16).

480 Comments

  • lordmarkitgs

    Posted Oct 20, 2008 1:16 pm PT

    It will take a very long time to recover. Share prices will maybe rise in around 12 months time.

  • matt_kun

    Posted Oct 10, 2008 3:42 pm PT

    Although this hit has hurt stock prices across the board, at a per share level, game stocks' value hasn't been hurt nearly as badly as stocks elsewhere. (GM's stock value per-share hasn't been this low since 1950!)

    I don't think it's over, but I believe we're near the bottom.

  • awakendjay

    Posted Oct 8, 2008 8:24 am PT

    Its all that guys fault....its all thats guys fault...omg omg omg its this persons fault.....omg ima blame that dude...omg omg omg...NO! look in the mirror, its that guys fault!

  • snakes3425

    Posted Oct 3, 2008 8:19 pm PT

    Congress has had second thoughts, and I think a lot of people have as well, a revivsed verson of the bill was signed into law today.

  • GhostStalkerX1

    Posted Oct 2, 2008 4:34 pm PT

    @adultgamer77 Half of the time when people say they hate america, there more than likly talking about our government. Anyhow, most americans need to realise, the governers/senators we vote for. We dont work for them, they work for us. Until people begin to stand up and realise what that means. The american government will continue to step on the american people.

  • fatmike2127

    Posted Oct 2, 2008 2:19 pm PT

    how the hell is this reagan's fault lord darkstorm? he's dead, it's dumb ass george bush's fault for giving away to much money that people couldn't back up

  • xxxarlow

    Posted Oct 2, 2008 12:56 am PT

    Whoa whoa whoa ppl, this shouldnt be about discussing the international credit crisis!! We need to turn this board into something important like which console is superior!! (Like every other news article on here)

    Can we have a system war..........YES WE CAN.

  • Lord__Darkstorn

    Posted Oct 1, 2008 11:23 pm PT

    Dude, this is all Reagan's fault. He's the one who brought back deregulation, and look where it got us...

  • pallex85

    Posted Oct 1, 2008 3:42 pm PT

    do i sense another great depression happening? banks are losing money too, like before

  • adultgamer77

    Posted Oct 1, 2008 10:58 am PT

    A couple of people here are saying "Americans Fault", it's not the people in general that did this, it's those big execs who pat themselves on the back with bonuses while the little guy works his tail off. I know a few people that are in that position and all I can tell you is that it is ridiculous what they get; bonuses, trips(that's not all business), private cars to and from work, and the list go on and on. The little guy on the other hand who is mopping the floors cannot get a raise because there is no money...it's bs. I've seen it and if they were not my friends I would of told them a long time ago what my thoughts were. Just as an example....an exec gets a job with a sign on bonus, if he gets terminated...he gets money, and at the end of the year...another bonus for doing a great job. The gaming industry might be loosing some steam...but it's going to stay on top in sales because as of right now, it's the cheapest form of entertainment. 1 game = 30+ hours of gaming + make your own drinks = under $100. Compare that to going to the movies, bar, etc.

  • prioritymail

    Posted Oct 1, 2008 7:06 am PT

    You know things aren't looking good when games are losing market value...

  • garrcus

    Posted Oct 1, 2008 6:59 am PT

    80gb's here are going for $399, and yeah the only real reason to purchase one is for MGS4 and God of War 3 whenever that may happen, otherwise Blueray movies are hardly dicernable from DVD's played on a $50 dollar up-converting 1080p dvd player. Not really worth the money until their prices drop!

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