9th July 2012  GDX12 Crashes to All-Time Low.

Since its inception in September 2011 the GDX12 had never fallen below 900 points. In June it spent the first three days below this figure and would fall into the 890 category twice more, recording its worst month ever.


The Geekdex (GDX12) is a price-weighted index representing the composite value of one share in twelve different retail, food and beverage, entertainment and technology companies whose products are of strategic importance to any self-respecting geek, nerd or hardcore gamer.


June's big event was E3 which took place in the Los Angeles Convention Center from the 5th to the 7th. Closing at a new all-time low of 894.61 on the 1st of June the GDX12 rose to 899.76 on the eve of the first presentation, reaching 914.92 by the halfway point before being dragged back down below 900 within days of E3 ending. Nintendo (NTDOY) suffered hardest, losing over $1.10 from its already battered share price during the expo, challenging lows the company hasn't seen since 2005. Shares in Sony (SNE) jumped during the expo itself but once the dust settled on a conference that failed to deliver any new or surprising news it fell back to within $0.06 of where it was on the 4th. Microsoft (MSFT) was the only one of the three GDX12 console makers to come out of E3 with its share price still improving, mainly on the back of its SmartGlass presentation instead of any of the games it announced. A running joke by the end of the expo was to act with surprise to the announcement of any game that didn't have a number after it with Microsoft announcing for the Xbox Halo 4, Gears of War: Judgment (4) Assassin's Creed 3 and of course Fifa 2013.


The main winner from E3? Shares in motion processing device manufacturer InvenSense (INVN) rocketed from $9.10 halfway through trade on the 4th of June to reach $11.83 near close on the 6th on the back of Nintendo's Wii-U presentation. Nintendo accounts for a large portion of InvenSense's revenue and utilises its motion processing chips in the Wii and Wii-U.


Shares in both The Coke-Cola Company (KO) and PepsiCo (PEP) performed strongly in June which countered the poorly performing entertainment and technology stocks and helped prevent the GDX12 from falling any lower than it did. Coke announced a dividend of $0.51 a share, in line with the dividend issued in March. Coke increased its dividend from $0.47 a quarter last year and has increased its dividend by at least $0.01 every year since 1989. At $78 Coke shares are at a high last seen in 1998 when they fell from a record high of over $87.


Graphics card producer NVIDIA (NVDA) experienced a jump in share value of over $1.00 following the announcement mid-month it had achieved performance records with its Tesla K10 GPU.


Rumours of the potential sale of the 61% controlling stock in Activision Blizzard (ATVI) by Vivendi (VIV) saw both companies suffer a fall in value but this recovered towards the end of the month even as the news was confirmed. Vivendi is under pressure to restructure with its share price at a nine-year low and its stake in Activision is valued at $8.2 billion. Vivendi subsidiary Universal Music Group is currently attempting to defend a deal to buy the recording arm of EMI Group before the EU.


Take-Two Interactive (TTWO) has seen its share price fall steadily since early February and in June it dropped below $10.00 a share for the first time since September 2010. At E3 they announced an intention to focus more on digital mobile games and while this helped stop the descent momentarily they would then begin the process of falling over $2.00 to close the month at $9.49 a share.


All in all, Coke-Cola, Pepsi and NVIDA, with assistance from Microsoft, helped the GDX12 close out the month of June at 933.25, up 39 points from the start of the month. This was however the only day the GDX12 closed above 920 and one of only eight days it closed over 910. European economic woes and the continued decline of Nintendo kept the GDX12 down and it doesn't seem either of these will end in the short term.


Comments