Equity Research Report Activision Blizzard (Q4_2020)

 

On 29^th October Activision Blizzard Inc. reported its Q3 results which revealed the firm beat forecasts by an adjusted EPS of about $0.88 against a lower $0.73 previously expected by the analysts. Besides, the number of monthly active users also beat estimations so that they have raised their outlook to a $105 12-month price for the end of this year.

Following this, the firm planned to launch two video game saga releases in November 2020, named “World of Warcraft: Shadowlands” and “Call of Duty: Cold War”, and will report the corresponding sales on 4^th February through its Q4 results. These two sagas have become two of the top-selling franchises in video game history and stayed as number one references during the 21^st Century within their video game genders, MMORPG and shooter respectively, as shown later in this report. Following this, this report forecasts future surprising sales records and EPS due to broader customer bases than estimated by analysts for both franchises.

Regarding the World of Warcraft release, the firm got plenty of pre-sales since the beginning of the year and thus its Q2 and Q3 results were outstanding. Besides, the firm introduced some adjustments to the video game content to improve the initial experience for new gamers considerably so that the firm is now retaining many more subscriptions than before. Furthermore, the community feedback about this new release was also quite positive, thus the customer base for this gold video game is rather likely to rise through this new launch.

Referring to the Call of Duty launch, the firm has released it at the same time as the long-awaited Playstation 5 console while becoming the strongest new release within this platform by far. Moreover, the customer base also raised sharply during the last months due to two trending outstanding previous successes: the free-to-play “Call of Duty: Warzone” for the PC platform and the new mobile version of the game. Both franchise offerings have been among the most played video games within their corresponding platforms in 2020, thus this new release is very possible to be extraordinarily successful as well in the console platform and achieve a sales record.

Nevertheless, this report states that, though market expectations are optimistic, analysts do not consider the stock prices of the strongest video game competitors in the industry have been raising a lot as a consequence of being favored by an uncommon episode as the current COVID-19 pandemic, whose ending is still uncertain. Thereby, the price target proposed is $95 for the end of the current year, which is optimistic to buy the stock but more conservative than the one given by other analysts. Anyway, the stock is rather likely to ascend even further after the firm publishes Q4 results better than forecast.

Please visit the following links to read the full research report and check analysis spreadsheets:

https://drive.google.com/file/d/1yHbtQhvDkENnAHRuJVwaJFBujJqDEebI/view?usp=sharing

https://drive.google.com/file/d/1g83edT0CIV8GtuduP0HJMNDveW0TxiaS/view?usp=sharing