Game On For Video Game Stocks
First, the pull back. Each summer over the past five years, these stocks experience a period of selling during June. June is typically a bad month for tech stocks. Even in positive years the SPDR XLK sees some selling in mid-June. Activision stock has run up 44% year-to-date chasing away lots of fresh cash. However, the company recently reported its earnings and analysts were spooked by the drop in Warcraft subscribers and so it sold off 6%. The company was also cautious about the upcoming console cycle and gave general market warnings. This has primed the pump for some selling in early June.
Electronic Arts has stumbled along for most of the year until moving higher after recently reporting its earnings. Unlike Activision's disappointment, EA beat estimates and guided higher causing the stock to pop. The company reached those numbers by cutting costs after a year that saw the company's CEO leave. EA also seems to be cautious about the new consoles. The stock has not recovered from its 2011 highs of mid $20's, but it is up 27.5% over the past month. So both the stocks have moved, but that doesn't mean new money can't still get in. The key on both of these names is to wait for the June selling period.
While both have been cautious about the new consoles, the excitement and anticipation for the consoles is building. This is the second piece to this investment decision. Microsoft's