Earnings preview: Take-Two Interactive and Activision Blizzard

This week sees heavyweights Activision Blizzard and Take-Two Interactive report quarterly earnings. Here’s what to expect.

Take-Two Interactive

When: 7 November, after market close

What: Q2 earnings

Take-Two’s (TTWO) share price is already riding high thanks to the success of Red Dead Redemption 2, trading around the $130 mark.

Made by its Rockstar Games division, the western homage opened to a colossal $725 million in worldwide retail sales in its first three days of release. This sent Take-Two’s share price up a hefty 11%.

The publisher has claimed this is the biggest opening in the history of entertainment. That’s not an outlandish statement.

To put perspective on those numbers, Avengers: Infinity War made around $630 million in its opening weekend. Although a cinema ticket doesn’t exactly cost the $60 Take-Two are asking gamers to pony up for its virtual horse opera.

Back in August, analysts at Merrill Lynch reiterated their ‘Buy’ recommendation for the stock, citing Red Dead Redemption 2’s likely strong sales and the likelihood of further dosh through streaming content.

The popularity of its sports franchise NBA 2K19 and a deal with golf’s PGA Tour should also help investor confidence.

The company has beaten estimates in the past few quarters so another beat shouldn’t be unexpected.

Activision Blizzard

When: 8 November, after market close

What: Q3 earnings

Activision Blizzard (ATVI) released its big winter game Call if Duty: Black Ops 4 at the start of October. In a move to refresh the series, the game was a multiplayer-only affair, ditching the single-player campaign as the venerable series looked to compete with the likes of Fortnite.

Physical sales of the game were down -50% on last year’s entry in the Call of Duty series, WWII, and -59% on the previous Black Ops game. However, in a sign of the direction the industry is going,  day-one digital downloads of the game were the highest for any game in Activision’s history.

Helping things is the news that EA has delayed the latest instalment of rival first-person shooter Battlefield 5 until November.

Activision shares have been flat since the game’s release, but the stock is up over 9% this year.

Consensus is that the publisher will announce a year-on-year decline in earnings. Zack’s suggests expectations are around earnings coming in per share of -$0.59, which would be a 15% fall from the same quarter last year, with revenue at $1.66 billion, down 12.72%.

How much Activision has done to address declining revenues since the last quarter will be the determining factor for any share price movement. A beat on Wall Street forecasts might move the stick higher; a miss could spell trouble for the publisher.