Market Insights

Many high profile technology stocks have rebounded this earnings season. Video-game makers aren’t so lucky.

Check out the three worst performing members of the S&P 500 and Nasdaq-100 today. No company is even close to these drops in either index:

• Electronic Arts (EA): Down 13 percent, its worst drop this decade.
• Take-Two Interactive (TTWO): Down 13 percent, its worst drop this decade.
• Activision Blizzard (ATVI): Down 11 percent

The current round of selling began last night when EA issued weak sales of its key Battlefield segment. That caused results to miss across the board, and guidance wasn’t much better.

TTWO followed this morning with a poor outlook of its own. ATVI reports after the closing bell next Tuesday, February 12. It’s yet to recover from weak commentary back in November.

Monday’s Market Action anticipated the bearish moves. The come amid increased competition from free games like Fortnite, partially owned by Tencent (TCEHY). Today’s carnage follows years of steady gains for big growth stocks on the Nasdaq between 2015 and 2018.

Take-Two Interactive (TTWO) chart with selected indicators.

TTWO and ATVI both hit new 52-week lows. Their drops contrast with the post-earnings rallies for big tech names recently. Apple (AAPL) and several chip companies, for instance, clawed higher on so-so numbers. Facebook (FB) reported stunningly positive results.

In conclusion, many tech stocks have managed to rebound from an ugly fourth quarter as investors went from viewing the glass as half-empty to half-full. But investors see little reason to give video-game makers the benefit of the doubt right now.