Video game stocks take a hit after Trump links games to mass shootings
Stocks of major video game companies dropped sharply Monday after President Trump and others, including House Minority Leader Kevin McCarthy (R-Bakersfield), linked this weekend’s mass shootings to violent video games.
Analysts said the slump reflected a familiar pattern, in which political rhetoric following mass killings drives fears of regulatory backlash against the industry. They don’t expect new regulations to follow.
For the record:
7:27 p.m. Aug. 5, 2019A previous version of this article attributed quotes describing the link between video games and mass shooting violence as a red herring to House Minority Leader Kevin McCarthy. Those statements were made by Michael Pachter, a managing director and analyst at Wedbush Securities.
Activision Blizzard took the biggest hit, with its stock falling nearly 6%, to $46.10. One of the company’s flagship games, “Call of Duty,” was named in a “manifesto” that the El Paso shooter posted online before the attack. Take-Two Interactive, publisher of the “Grand Theft Auto” franchise, fell 5.2%, to $115.38. Electronic Arts, which makes the bulk of its revenue on sports titles such as “Madden” and “Fifa,” fell 4.6%, to $88.59.
Those declines were greater than the plunge of the overall market. The Standard and Poor’s 500 index fell 2.98% on Monday, amid escalating trade tensions between the U.S. and China. The Nasdaq index, which is heavily weighted toward tech, fell 3.5%.
In an address, President Trump said, “We must stop the glorification of violence in our society. This includes the gruesome and grizzly video games that are now commonplace.” The remarks echo responses by the NRA to past mass shootings, asserting that the incidents were due to a “culture of violence” created, in part, by violent video games.
The slump in video game stocks is a direct result of the comments by Trump, McCarthy and others, according to Michael Pachter, a managing director and analyst at Wedbush Securities who covers the video game industry.
“Whenever a white male kills multiple people, this is what they come up with,” Pachter said. “What are the odds of a white male in his 20s being a video gamer? 90%?”
Pachter said the link between video games and mass shooting violence was a red herring used to divert attention from discussions on gun control regulation. “Nearly every other country has video games,” he said. “We are the only one who has these type of rampant mass shootings.”
Zynga, primarily a publisher of nonviolent mobile games, also fell by 5.3% on Monday. Andrew Uerkwitz, a managing director and analyst at Oppenheimer & Co., an investment bank, said it was common for political attacks on the video game industry to sweep up companies with nonviolent content. “Typically when you get things like this, it’s sell first, ask questions later,” Uerkwitz said.
Most analysts don’t foresee long-term effects on the video game industry.
“We’ve seen this before. When the president calls out an industry, there’s usually a reaction,” said Doug Creutz, a managing director at investment bank Cowen & Co. “It doesn’t tend to stick.”
Must-read stories from the L.A. Times
Get the day's top news with our Today's Headlines newsletter, sent every weekday morning.
You may occasionally receive promotional content from the Los Angeles Times.