QoD: Electronic Arts vs. Activision: Which has been the better performing stock over the past five years?

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Feb 10, 2020
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Question of the Day, Investing, Stocks

Answer: Activision

Questions:

  • Reviewing the chart, how much would your $100 investment five years ago have grown if you had invested in...
    • Electronic Arts?
    • Activision?
    • The overall stock market (S&P 500)? 
  • Would you have been better off choosing between these 2 companies or just buying the overall stock market through an index fund? 
  • Which games do you prefer?  Would that be enough information to drive you to invest in one company over the other? What else would you want to know?

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the Numbers:

Forbes had an article last month comparing these two companies.   

Here are a few of the key differentiators discussed in the article:

  • Activision Blizzard’s Revenues of $7.5 Billion Are Much Higher Than $4.9 Billion For Electronic Arts
  • Activision Blizzard’s Revenues Grew At A Higher Pace On Average When Compared To Electronic Arts
  • Electronic Arts Is More Dependent On Console Platforms For Its Revenue, While Activision Blizzard Is Well Diversified In Console, PC, and Mobile Platforms.

See also “How Activision is Building the ESPN of Esports” from Motley Fool.

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**Want to try this at home? You can do it for any stocks!

  1. Pull historical stock information from Yahoo Finance for 5 years for each company and drop in Google sheet.

(1a. Sort columns to reverse the date order.)

  1. Using the Adj. Close column (which accounts for dividends), index the first day in the series to 100. How? Divide each of the adj. stock prices by that first day’s stock price. 
  2. Then arrange three columns with one being date, second being first company’s stock prices indexed to first day in the series and the third for the other company’s indexed stock prices.
  3. Highlight those three fields, and Insert>Chart and voila you have the stock comparison chart you see above. 

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For similar comparisons, try these stock match-ups:

 

About the Author

Beth Tallman

Beth Tallman entered the working world armed with an M.B.A. in finance and thoroughly enjoyed her first career working in manufacturing and telecommunications, including a stint overseas. She took advantage of an involuntary separation to try teaching high school math, something she had always dreamed of doing. When fate stepped in once again, Beth jumped on the opportunity to combine her passion for numbers, money, and education to develop curriculum and teach personal finance at Oberlin College. Beth now spends her time writing on personal finance and financial education, conducting student workshops, and developing finance curricula and educational content. She is also the Treasurer of Ohio Jump$tart Coalition for Personal Financial Literacy.