What’s Happening With Activision Blizzard Stock?
Activision Blizzard stock (NASDAQ: ATVI) reported its Q3 results in the second week of November, with revenue and earnings falling above the street expectations. Activision Blizzard’s revenue of $1.8 billion reflected a 14% y-o-y decline on a GAAP basis, while its net bookings of $1.8 billion were down 3% y-o-y. This can be attributed to a decline in monthly active users (MAUs) for both Activision and King segments. The gaming industry is witnessing a slowdown in user engagement after robust growth during the pandemic. For perspective, Activision Blizzard’s total average MAUs rose 15% to 401 million in 2021, compared to 349 million in 2019, before the pandemic. This metric has now fallen to 368 million as of September 2022.
Looking at the bottom line, the company reported earnings of $0.68 on a per-share and adjusted basis, down 24% y-o-y but well above the consensus estimate of $0.50. The y-o-y fall can be attributed to higher costs, with the adjusted operating margin falling over 900 bps to 34% during the quarter.
We maintain Activision Blizzard’s Valuation to be $94 per share, over 20% above its current market price of $74. ATVI stock has seen a rise of 2% in a month, while it’s up around 12% year-to-date. However, it remains well below the $95 price offered by Microsoft, implying that the investors may be weighing the possibility of the U.S. Federal Trade Commission blocking the Microsoft-Activision Blizzard merger.
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- What’s Next For Activision Blizzard Stock?
The deal has faced regulatory hurdles in the U.S., Europe, and the U.K. As per a media report, Microsoft may be willing to offer concessions, such as a long-term licensing deal with Sony. [1] The near-term stock movement for ATVI will likely depend on the decisions made by the regulatory authorities.
While ATVI stock looks like it has more room for growth, it is helpful to see how Activision Blizzard’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Take-Two Interactive vs. Fair Issac.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
| Returns | Nov 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| ATVI Return | 2% | 12% | 106% |
| S&P 500 Return | 2% | -17% | 77% |
| Trefis Multi-Strategy Portfolio | 2% | -20% | 215% |
[1] Month-to-date and year-to-date as of 11/30/2022
[2] Cumulative total returns since the end of 2016
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- Microsoft likely to offer EU concessions soon in Activision deal -sources, Foo Yun Chee, Reuters, Nov 29, 2022 [↩]