Over the last few days, a lot of news slipped out about Sony (NYSE:SONY), particularly in its gaming operations, thanks to a hack that dropped no shortage of details. With that hack came plenty of insight into Sony’s near-term future and even its mid to long-term plans. The newest reports suggest that Sony’s concerns went beyond just “whatever Microsoft (NASDAQ:MSFT) is doing” and into “how much is this costing us?” However, News of Sony’s frugality sat well with investors, and shares were up nearly 3% in the closing minutes of Thursday’s trading.
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Reports noted that multiple Sony studios—from Insomniac to Naughty Dog to even Bungie—were all facing pressure to cut costs and fire staff to help do the job of said cost-cutting. Several layoffs have already happened, particularly at Naughty Dog and Bungie, and indeed, there was talk of closing one entire studio outright. Insomniac, meanwhile, was looking for ways to drop between 50 and 75 people from its roster and would have made some noteworthy changes to get there. Reports note that Insomniac was looking to cut the teams from the “Wolverine” and “Spider-Man 3” games while drawing staff away from the previously-mentioned “Ratchet & Clank” game.
Costs on the Rise
Costs are on the rise all over, and Sony is no exception here. We also learned that Sony is considering price hikes on games, mostly as a direct response to rising development costs. That’s a strategy that comes with its own risks, but it’s a strategy nonetheless. However, it’s also worth noting that Sony’s not exactly crying wolf on the cost issue in the interest of lining its pockets at gamers’ expense. Reports note that “Spider-Man 2” development costs hit $300 million, which was $30 million over budget. Both “The Last of Us: Part II” and “Horizon: Forbidden West” took over $200 million each, and the list goes on.
Is SONY a Buy or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SONY stock based on three Buys assigned in the past three months, as indicated by the graphic below. After a 20.49% rally in its share price over the past year, the average SONY price target of $106 per share implies 14.22% upside potential.
