Sony (SNE) Stock Close to 19-Year High, PlayStation 5 Driving Bull Run

UTC by Godfrey Benjamin · 3 min read
Sony (SNE) Stock Close to 19-Year High, PlayStation 5 Driving Bull Run
Photo: Shutterstock

Yesterday Sony (SNE) stock closed with a 2.58% increase, at $83.37. However, today Sony stock is 2.42% down, trading at $81.36.

Sony Corporation (NYSE: SNE) is one of the Wall Street’s most profitable stocks of the week as it has recorded a 19-year high after posting an impressive Q1 fiscal year earnings report on Tuesday. The performance of the Q1 fiscal year spanning April to June was triggered by the tech giant’s gaming division and expectations of the release of the Playstation 5. Sony (SNE) stock closed with a 2.58% increase on August 4, at $83.37.

The highest level the stock has ever achieved was $156.75 back on February 29, 2000, and analysts have tipped the stock to follow this bullish path when the PlayStation 5 console finally hit the market. Amit Garg, a senior analyst of Japan equities at CLSA, told CNBC he expects Sony to sell 6.7 million units of the console in the current fiscal year and said the company’s own profit forecast for the gaming unit will likely be beaten, given the strength in the quarter just gone.

However, today Sony stock is 2.42% down, trading at $81.36.

Sony (SNE) Stock Reacts to the Company’s Q1 Report

The impressive outlook of Sony stock got its foundation from the company’s released earnings report. The Financial Year 2020 Q1 consolidated sales increased 2% compared to the same quarter of the previous fiscal year (“year-on-year”) to 1 trillion 968.9 billion yen and consolidated operating income slightly decreased to 228.4 billion yen from the same quarter of the previous fiscal year, which was a record high.

The income before taxes rose to 319.9 billion yen with an 88.9 billion Yen increase. This growth was partly spiked by an improvement in unrealized gains on securities investments in other income and expenses. While recording a 31.5 billion yen in extraordinary gains, in the 2019 fiscal year, the company has increased its contributions to the society including contributions made to the Global Relief Fund for COVID-19.

SNE planned to issue 25 yen per share as an interim dividend this fiscal year, compared to 20 yen per share in the 2019 fiscal year. While it is too soon to determine how much the annual dividend amount will be this fiscal year, it hopes to maintain its policy of increasing accruable dividends in a steady manner over the long term.

While the quarter featured global lockdowns, the company benefitted from the increased demand in video games with its PlayStation Plus subscribers reached approximately 45 million people worldwide.

Anticipation of PS5 Release

Earlier, Coinspeaker reported the plan by SNE to unveil its well-anticipated PlayStation 5 Console. When finally launched, PlayStation 5 will be the most advanced gaming system the world has ever seen. As Serkan Toto, CEO of Tokyo-based game industry consultancy Kantan Games told CNBC:

“PS5 will be definitely Sony’s key driver this fiscal year, It’s the start of a new console generation, the previous PlayStation was released seven years ago, and the PS5 hype is already through the roof.”

With plans to target hardcore gamers with the PlayStation 5, Toto added:

“I expect 6 million units of that to be sold, basically snapped up…out the opening gate, and I would say that if you look at some of the recent trends, especially strong user engagement, strength in digital sales most of this trends will carry over to the PlayStation 5, providing, I think, good earnings momentum for Sony in the next couple of years to three years.”

Drawing from the changing lifestyles due to the COVID-19 situation, Sony revenue from sales of the PS5 games may eventually surpass expectations.

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