Earnings results often indicate what direction a company will take in the months ahead. With Q4 behind us, let’s have a look at Roblox (NYSE:RBLX) and its peers.
Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
The 4 video gaming stocks we track reported a softer Q4. As a group, revenues missed analysts’ consensus estimates by 5.9% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 8.1% on average since the latest earnings results.
Roblox (NYSE:RBLX)
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Roblox reported revenues of $988.2 million, up 31.8% year on year. This print exceeded analysts’ expectations by 1.9%. Despite the top-line beat, it was still a slower quarter for the company with full-year EBITDA guidance missing analysts’ expectations.
“Roblox had a strong 2024, driven by our commitment to innovation and community. We’re building a platform that goes beyond technology—it’s about fostering genuine connections. As we aim to support 10% of the global gaming content market, we’ll continue investing in our virtual economy, app performance, and AI-powered discovery and safety, empowering creators and enhancing the user experience,” said David Baszucki, founder and CEO of Roblox.
Roblox achieved the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update of the whole group. The company reported 85.3 million daily active users, up 19.3% year on year. Still, the market seems discontent with the results. The stock is down 21% since reporting and currently trades at $66.85.
Is now the time to buy Roblox? Access our full analysis of the earnings results here, it’s free.
Best Q4: Electronic Arts (NASDAQ:EA)
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Electronic Arts reported revenues of $1.88 billion, down 3.2% year on year, falling short of analysts’ expectations by 4.6%. The business performed better than its peers, but it was unfortunately a mixed quarter with EPS guidance for next quarter exceeding analysts’ expectations but a significant miss of analysts’ EBITDA estimates.
Electronic Arts scored the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 21% since reporting. It currently trades at $146.74.
Is now the time to buy Electronic Arts? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Skillz (NYSE:SKLZ)
Taking a new twist at video gaming, Skillz (NYSE:SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.
Skillz reported revenues of $20.37 million, down 34.5% year on year, falling short of analysts’ expectations by 18.7%. It was a disappointing quarter as it posted a decline in its users.
Skillz delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company reported 110,000 monthly active users, down 19.7% year on year. The stock is flat since the results and currently trades at $5.06.
Read our full analysis of Skillz’s results here.
Take-Two (NASDAQ:TTWO)
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Take-Two reported revenues of $1.36 billion, flat year on year. This number lagged analysts' expectations by 2.1%. It was a slower quarter as it also recorded full-year EBITDA guidance missing analysts’ expectations.
The stock is up 23.6% since reporting and currently trades at $226.22.
Read our full, actionable report on Take-Two here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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