Video Game Earnings Streaming After The Bell: What To Expect From Activision, Take-Two Following Weak Q3 From Electronic Arts

Video game publishers Activision Blizzard Inc ATVI and Take-Two Interactive Software Inc TTWO are gearing up to report quarterly results after the close. Both stocks are trading down on Monday as investors exercise caution in the wake of Electronic Arts Inc's EA disappointing results.

What To Know Before The Bell: Activision is expected to report fourth-quarter earnings of $1.51 per share on quarterly revenue of $3.17 billion, according to Benzinga Pro. 

In the company's most recent quarter, Activision turned in a top-line beat, accompanied by an upside earnings surprise as "Call Of Duty: Modern Warfare II" became the fastest-selling title in the history of the popular "Call Of Duty" franchise.

Related Link: Activision Blizzard Q3 Earnings: Revenue And EPS Beat, Call Of Duty Sales Record, Microsoft Acquisition Update And More

Activision didn't provide forward guidance, but the company noted that it was expecting its deal with Microsoft Corp MSFT to close before the end of June. New reports from the weekend indicate that the Competition and Markets Authority (CMA) is expected to weigh in on the deal in the coming days. Chatter that the CMA could block the deal is beginning to build. 

Investors will want to watch for any new updates from Activision management on the anticipated closing of the deal. 

Take-Two is expected to turn in third-quarter earnings of 87 cents per share on quarterly revenue of $1.45 billion, according to Benzinga Pro.

In the company's fiscal second quarter, Take-Two missed analyst estimates on both the top and bottom lines and provided weak guidance. The company noted that it was anticipating full-year 2023 revenue in a range of $5.41 billion to $5.51 billion, versus estimates of $5.89 billion. 

The company guided for third-quarter revenue between $1.43 billion and $1.48 billion and noted that it expected a net loss in the range of 85 cents per share to 95 cents per share. 

"Our reduced forecast reflects shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile," Take-Two chairman and CEO Strauss Zelnick said at the time.

Electronic Arts shares dropped more than 5% last week after the company reported fiscal third-quarter results that were adversely impacted by the macro environment. 

Related Link: Electronic Arts Q3 Earnings Highlights: Shares Fall On Cautious Guidance, But This Game Is Hitting Record Engagement

The video game publisher said its quarterly results took a hit because of video game release delays and production challenges. EA said market uncertainty mounted during the quarter and it had to take measures to protect its underlying profitability. 

Analyst Expectations: Analysts appear to be incrementally more positive ahead of the results. Wedbush assumed coverage on Activision last week with an Outperform rating and a price target of $95, but the analyst's rosy outlook is based on expectations that the Microsoft deal will go through.

Wedbush also assumed coverage of Take-Two with an Outperform rating and price target of $140. MoffettNathanson and Credit Suisse came out with positive notes on Take-Two ahead of the company's third-quarter report as well. 

ATVI, TTWO Price Action: At the time of writing, Activision was down 4.17% at $72.10 and Take-Two was down 4.06% at $104.84, according to Benzinga Pro.

Photo: StockSnap from Pixabay.