What’s Next For Activision Blizzard Stock?

+23.60%
Upside
75.93
Market
93.85
Trefis
ATVI: Activision Blizzard logo
ATVI
Activision Blizzard

Activision Blizzard stock (NASDAQ: ATVI) reported its Q2 results earlier this month, with revenue coming in above and earnings being in line with the consensus estimates. Activision Blizzard’s revenue of $1.6 billion reflected a 28% y-o-y decline on a GAAP basis, while its net bookings of $1.6 billion were down 15% y-o-y. This can be attributed to a decline in monthly active users (MAUs) for both Activision and King segments. The overall 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. We forecast this metric to decline in mid-single-digits in 2022.

Looking at the bottom line, the company reported earnings of $0.48 on a per share and adjusted basis, aligning with the consensus estimate and reflecting a sharp 60% decline from the $1.20 figure in the prior-year quarter. Although the latest Call of Duty game released in Q4 2021 didn’t perform as earlier anticipated, there will be high hopes for its new Call of Duty game planned for an October release this year, given that its a sequel to the 2019 game, which was the most successful Call of Duty game for the company.

We maintain our Activision Blizzard’s Valuation to be $93 per share, 15% above its current market price of $81. ATVI stock has seen a rise of 6% in a month, while it’s up around 21% year-to-date. However, it remains 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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Now that ATVI stock has seen a rise of 6% in a month, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of an increase for ATVI stock over the next month. ATVI stock has seen a rise of 6% or more in a month 721 times in the last ten years. Of those, 449 resulted in ATVI stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 449 out of 721, or about a 62% chance of a rise in ATVI stock over the next month. See our analysis of Activision Blizzard’s Stock Chance of Rise for more details.

While ATVI stock looks like it can gain over the next month, 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 Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ATVI Return 1% 21% 123%
 S&P 500 Return 2% -12% 88%
 Trefis Multi-Strategy Portfolio 6% -8% 261%

[1] Month-to-date and year-to-date as of 8/12/2022
[2] Cumulative total returns since the end of 2016

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