Why You Should Love Activision Blizzard Stock

Thursday, May 6, 2021 | Sam Quirke
Why You Should Love Activision Blizzard StockIt’s almost two years to the day since shares of video game maker Activision Blizzard (NASDAQ: ATVI) bottomed out after shedding more than 50% of their value. In what was one of the more vicious sell-offs the stock has ever seen, shares tagged an all-time high in September 2018 before embarking on a six-month-long drop that must have had shareholders very nervous. 
But once the selling ran out of steam, business was quickly back to usual which meant a rallying share price and it’s been much of the same since. Even the COVID pandemic which gave markets their biggest rattle since 2008 barely troubled them. Indeed, in many ways it could be said the pandemic was the makings of the current Activision as it has sent their shares to fresh highs after fresh highs for much of the past year
With more people than ever before living under lockdowns, many turned to video games for entertainment. Activision made the most of it and their shares are up more than 120% in the past two years and close to 50% in the past year alone. Even as economies reopen, it looks like these new gamers are going to stick around for a time yet and Wall Street hasn’t been slow about backing Activision to continue performing just as strongly. 

Solid Earnings

On Monday evening, investors and Wall Street alike got a look at their latest earnings report which confirmed as much. Revenue was up a solid 36% on the year and well ahead of analyst expectations, as was bottom line EPS. They added a fresh 38 million users to their books which helped spur management into raising their forward guidance for the year. Video games of 2021 are very different to the video games of 2001. Those of us who cut our teeth with the latter were used to making a simple one-time purchase for a game’s disc, but the gaming model has shifted now to continual online in-game spending incentives within a single game that drastically increase a customer’s potential lifetime value. 

On that front, Activision’s in-game net bookings jumped to $1.34 billion from $0.96 billion a year ago and that trend is set to continue into the second half of the year. Bobby Kotick, CEO of Activision, spoke to “that relentless drive across our franchises which produced strong first-quarter results that were well ahead of expectations.” He expects this “continued overperformance” to drive a much better than expected outlook for the year

This overperformance will come as no surprise to investors already involved, and should be the final confirmation that the rest of us are waiting for to jump in. Recent months and weeks have seen consistent upgrades from sell-side analysts as Activision’s outlook has gone from strength to strength. 

Fresh Upgrades

Morgan Stanley reaffirmed their Overweight rating on the stock on Monday before results were even released. Their $115 price target suggests there’s upside of close to 30% to be had from current levels. Jefferies was out with a $120 price target late last month and pointed to how the company is sporting "best-in-class" intellectual property that should help them capture market share and boost audience and product longevity. 

From a higher-level perspective, Jefferies also came out strong on the video game industry overall. Andrew Uerkwitz and his team of analysts wrote in a note to clients that "videogames are as popular as ever. We don't see that changing any time soon; we expect the $175B industry to continue to grow at double digits for the next five years. And almost as important: Despite fears that a reopened economy marks the end of the stay-at-home trade, Jefferies expects big publishers will remain "robust."
Why You Should Love Activision Blizzard (NASDAQ: ATVI)


There’s not much more the individual investor should need to hear when it comes to making a decision to buy or pass. We’re talking about an industry that’s been catapulted to heights it was probably going to take years getting to, and a company that’s shown it’s able to lead from the front. The recent weakness in tech that has filtered through to Activision and its peers should be seen as a gift of a buying opportunity.

Featured Article: How to identify percentage decliners


7 Stocks That Can Help You Profit From Summer Shortages

One of the lingering impacts of the Covid-19 pandemic is the supply chain disruptions that continue to bedevil many sectors. By now, every investor is aware of the global chip shortage that is disrupting many sectors that were projected to have strong growth in 2021.

But there are many more sectors that are being affected by supply chain disruptions. And this affects everything from big-ticket items like cars to everyday items like pet food and even bacon.

The focus of this special presentation is seven companies that stand to benefit from the current disruption in the supply chain. All of these companies delivered strong gains in 2020. Some of them have weakened in 2021, but that was before the full extent of the supply chain weakness was discovered.

As the economy reopens, the shortage of items is likely to continue and become much more notable. When they do, many of these stocks may get overpriced. That’s why now is the time to get in on these stocks that can help you work the supply chain in your favor.

View the "7 Stocks That Can Help You Profit From Summer Shortages".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Activision Blizzard (ATVI)2.7$95.97-3.2%0.49%32.31Buy$110.00
Compare These Stocks  Add These Stocks to My Watchlist 

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.