Spotting Winners: Skillz (NYSE:SKLZ) And Video Gaming Stocks In Q3

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how video gaming stocks fared in Q3, starting with Skillz (NYSE:SKLZ).

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 Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 3.3% below.

Thankfully, share prices of the companies have been resilient as they are up 7.7% on average since the latest earnings results.

Weakest Q3: Skillz (NYSE:SKLZ)

Skillz reported revenues of $24.56 million, down 32.6% year on year. This print fell short of analysts’ expectations by 7.9%. Overall, it was a disappointing quarter for the company with a decline in its users and a significant miss of analysts’ number of paying monthly active users estimates.

“Our third quarter operating performance was marked by continued execution on our strategic operating priorities as we further position Skillz to generate sustainable top-line growth and positive cash flow,” said Andrew Paradise, Skillz’ CEO.

Skillz delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The company reported 121,000 monthly active users, down 28% year on year. Unsurprisingly, the stock is down 23.6% since reporting and currently trades at $4.31.

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Best Q3: Take-Two (NASDAQ:TTWO)

Take-Two reported revenues of $1.35 billion, up 4.1% year on year, outperforming analysts’ expectations by 1%. The business performed better than its peers, but it was unfortunately a slower quarter with full-year EBITDA guidance missing analysts’ expectations.

Take-Two pulled off the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 10.2% since reporting. It currently trades at $183.55.

Roblox (NYSE:RBLX)

Roblox reported revenues of $919 million, up 28.8% year on year, exceeding analysts’ expectations by 3.8%. Still, it was a slower quarter as it posted full-year EBITDA guidance missing analysts’ expectations and revenue guidance for next quarter missing analysts’ expectations significantly.

Roblox delivered the weakest full-year guidance update in the group. The company reported 88.9 million daily active users, up 26.6% year on year. Interestingly, the stock is up 37.7% since the results and currently trades at $59.45.

Electronic Arts (NASDAQ:EA)

Electronic Arts reported revenues of $2.03 billion, up 5.8% year on year. This print surpassed analysts’ expectations by 2.3%. However, it was a slower quarter as it produced EPS guidance for next quarter missing analysts’ expectations significantly and full-year revenue guidance meeting analysts’ expectations.

The stock is up 1.5% since reporting and currently trades at $147.81.

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This content was originally published on Stock Story