Activision Blizzard (ATVI) Stock Tanks on Lower Fourth Quarter Results

Shares of Activision Blizzard Inc. were down -2.92 or -9.57 percent to $27.60 per share in Friday’s premarket after the company reported lower than expected earnings and revenue for its fiscal fourth quarter yesterday after the market close. Activision Blizzard stock closed at $30.52, up +0.37 or +1.23 percent in Thursday’s regular trading session.

Santa Monica, California based Activision Blizzard Inc. is a U.S. video game publishing company.
The firm is the result of the 2007 - 2008 merger of Activision and Vivendi Games, the holding company for Sierra Entertainment and Blizzard Entertainment at the time. The company owns some of the world’s most lucrative video gaming franchises including World of Warcraft, Call of Duty and Starcraft. Activision Blizzard was added to the S&P 500 in August of last year becoming one of only three gaming companies in the index along with Electronic Arts and Microsoft.

In November of 2015, the company acquired social gaming company King Digital Entertainment, known for Candy Crush Saga for $5.9 billion. In January of 2016, the company announced it would acquire all the assets of Major League Gaming and is currently producing a World of Warcraft film with Legendary Pictures.

For the company’s fiscal fourth quarter, earnings per share came to $0.83 on revenue of $2.12 billion. Analysts forecast the company would earn $0.86 on $2.2 billion in earnings. Despite a four percent decline in revenue year on year, the company’s higher margin digital channel’s revenue increased by 14 percent to $780 million.

Robert A. Kotick, Activision Blizzard’s President, Chief Executive Officer and Director told investors in a conference after the earnings release that, “We ended our 2015, our 25th year, with $4.6 billion of revenues, $1.5 billion of operating income and $1.2 billion of operating cash flow. Upon the expected close of our acquisition of King later this month, we'll have over a 0.5 billion monthly active users in 196 countries, which as an entertainment network, ranks only behind Facebook, YouTube and WeChat in monthly active users.”

Kotick continued, “We'll have seven times the audience members of Netflix and have a larger audience than Snapchat and Twitter combined. We'll be the world's leading standalone interactive entertainment company and we expect 2016 to be a record year for the company, with $6.25 billion of revenues and more than $2 billion of operating income.”

For the company’s first quarter, guidance of $0.11 per share was given on revenue of $800 million. The analyst consensus was for $0.18 per share on $745 million in revenue in the first quarter. First quarter results will include mobile gaming company, King Digital Entertainment. The $5.9 billion transaction for King is set to close this month.

Activision Blizzard stock has already sold off significantly since trading just under $40 per share at the end of December. This morning’s action has seen the stock recover considerable ground from yesterday’s aftermarket and since the stock opened for trading in today’s premarket, which could indicate a buying opportunity.

Other News about ATVI

Destiny's 'Crimson Days' Event Is A Pointless, Pleasant Diversion

Activision Blizzard’s new game expansion gets positive review.

Stifel Remains A Buyer Of Activision Blizzard Into Q4 Earnings Print

Analyst remained bullish on the stock despite yesterday’s earnings release.

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Published on Feb 12, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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