Jefferies Picks the Video Game Winner this Holiday Season

There were also more bearish signs for GameStop in Jefferies' note

Dec 12, 2018 at 9:47 AM
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Brokerage firm Jefferies this morning issued a thorough note on the video game sector. Analyst Timothy O'Shea said a survey of 500 gamers pointed toward Take-Two Interactive Software, Inc.'s (NASDAQ:TTWO) "Red Dead Redemption 2" as the winner of the holiday season. TTWO shares are trading up 2.3% at $107.85 in response.

Looking back, the security has been disappointing on the charts since its high of $139.91 on Oct. 1. It was down roughly 4% year-to-date coming into today, and there's recently been a notable rise in short interest. More specifically, the number of shares held by TTWO short sellers increased by 83% in the past two reporting periods.

Moving on, Jefferies had less compelling words for Electronic Arts Inc. (NASDAQ:EA), labeling the company's "Battlefield V" as the loser of this holiday season. O'Shea added that EA's "FIFA" game has also struggled. The stock's losses have been even steeper than sector peer Take-Two, with the shares collapsing from $151.26 back in July to today's perch at $84.91.

Checking in on some more losers, Activision Blizzard, Inc. (NASDAQ:ATVI) and GameStop Corp. (NYSE:GME) were also mentioned. Jefferies sees ATVI's "Call of Duty" and "Overwatch" games both struggling due to the popularity of "Fortnite," while signs of an increase in digital game downloads could be a negative for GME. ATVI hasn't avoided the sector headwinds, down 42% this quarter to trade at $48.99. GameStop stock has been terrible for years and was last seen at $12.95.

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