Friday, May 14

When the market brings gaming down, this stock is a buy

Gaming may be a massive industry, but lately, shares of top video-game publishers have been struggling, so much so that CNBC’s Jim Cramer decided to dig deeper on Friday and find the source of the weakness.

Even with the triple tailwinds of the rise of the stay-at-home economy, the rise of e-sports and the rise of in-game transactions, shares of Activision Blizzard and Take-Two Interactive Software have been pummeled in recent weeks, losing 40 percent and 18 percent in value, respectively, since the end of September.

“Their stocks have both been tossed into the wood-chipper like Steve Buscemi near the end of Fargo,” the “Mad Money” host said, saying that the explanation for this “conundrum” was complicated.

In a nutshell, sales weakness at Activision Blizzard and fellow gaming player Electronic Arts has weighed on Take-Two’s shares as exchange-traded funds that package the video-game stocks together dragged the cohort lower, Cramer said.

“Something has gone wrong at Activision Blizzard, […] but the smaller, more nimble Take-Two is doing great and I think it’s insane that this stock has been hit so hard,” he said. “The market has clearly turned on the video game publishers and it’s painting with a very broad brush, but Take-Two’s doing great. I think you’re getting a terrific buying opportunity, and every time Take-Two gets dragged down by weakness at Activision or Electronic Arts, you know what I’d do? I’d just buy more.”

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