Thursday's Headlines: Ubisoft Plummets After Game Cancellation
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Eventbrite (EB) +13.8%
Baozun (BZUN) +11.5%
Peloton Interactive (PTON) +10.4%
Upstart Holdings (UPST) +8.4%
Bumble (BMBL) +8.1%
Moving Down ⬇️
Chegg (CHGG) -4.6%
Trip.com Group (TCOM) -3.0%
Salesforce (CRM) -1.7%
Wynn Resorts (WYNN) -1.3%
Ubisoft Plummets After Game Cancellation 🎮
Video game producer Ubisoft has cratered by over 15% today as poor performance of its current properties has plagued its recent history. The firm blamed the underperformance of titles such as ‘Just Dance 2023’ along with current macroeconomic conditions for its recent failings, with the French publisher now having reduced its expected booking for the quarter from €830 million down to €725 million.
CEO Yves Guillemot expressed his disappointment with the company’s performance by stating:
“We are facing contrasted market dynamics as the industry continues to shift towards mega-brands and everlasting live games, in the context of worsening economic conditions affecting consumer spending.”
The global gaming market had been expected to contract throughout the year, but Ubisoft appears to have suffered worse than most. It’s currently down over 55% for the past year as it struggles to deal with higher prices and a general pullback in discretionary spending from consumers.
Ubisoft is now being viewed as a takeover target by many analysts, with the firm having canceled three upcoming unannounced games along with the aforementioned cutting of its financial targets. Ubisoft now expects net bookings for 2022 to fall by 10%, down from a previous expectation of 10% growth.
Alphabet Cutting Staff in Health Sciences Unit 🔤
Parent company of Google, Alphabet, is the latest in a long line of companies that have implemented job cuts to kick off the year. Verily, Alphabet’s health sciences unit, will cut 15% of its workforce, amounting to roughly 240 jobs.
The cuts are part of a restructuring that will see Verily attempt to become financially independent from its parent company. However, they also form part of a broader strategy at Alphabet to reduce its expansive workforce ahead of an impending recession and to counteract its significant hiring since the pandemic.
While its Big Tech compatriots like Amazon and Facebook have been quick to cut jobs, Alphabet has been wary to pull the trigger, with Verily — part of the company’s Other Bets category — potentially the first domino to fall. It is reported that there is a growing anxiety amongst its workforce that major layoffs could hit the firm soon, fed by changes in performance reviews and budget cuts on things like travel and swag. The fact that its most recent quarter was its weakest for revenue growth since 2013 doesn’t help matters either.
Shares of Alphabet rose 3% yesterday.
TSMC Prepares for Slowing Sales 💾
Chipmaker TSMC warned investors that the new year won’t be so shiny and bright. Management stated that it expects revenue to drop as much as 5% in the first half of 2023 as its key partner Apple slashes orders due to falling discretionary spending. This will see the Taiwanese company bring in $16.7 billion to $17.5 billion, compared with $17.57 billion a year earlier. Shockingly, this follows a very positive Q4 that surprised the market by beating forecasts across the board — TSMC saw a 78% jump in profits during the period.
However, the pain isn’t expected to last long. According to CEO C.C. Wei, the company expects “the semiconductor cycle to bottom sometime in the first half and see a recovery in second half 2023." He added that growth will be fueled by new product releases such as artificial intelligence-enabled goods.
But just in case, TSMC will slash its capital expenditure in the new year by upwards of $4 billion. On this decision, Chief Financial Officer Wendell Huang stated:
"Given the near-term uncertainties, we continue to manage our business prudently and tighten up our capital spending where appropriate."
So far, TSMC’s stock seems unaffected by the news.