Are Activision’s Best Days Behind It?

Activision Blizzard (ATVI) was one of the best performing large cap stocks in 2015 and it has sustained its uptrend in 2016 as well. Several factors have contributed to Activision’s meteoric rise and there is no reason to believe why the stock cannot move higher in the future.

Growing rapidly

Activision Blizzard has performed very well in the past ten years, as the company’s yearly revenue has surged almost 220 percent in the reference time frame. The company’s Call of Duty series has played a significant role in achieving this growth.
Moreover, Activision has prolonged its Call of Duty development cycle and it frequently produces more revenue compared to numerous Hollywood blockbusters.

Furthermore, the company is on its way to launch a new installment of its Call of Duty series titled “Call of Duty: Infinite Warfare”. The company detailed that new features such as space flight and alien traversal are included in the upcoming installment. Apart from these, Activision’s Skylanders franchise to date has generated over $3 billion in sales.

However, one of Activision’s most popular online RPG, World of Warcraft, subscribers count is decelerating gradually, but it still has other games which are performing well such as StarCraft II, Diablo III and Hearthstone. The company has generated a lot of revenue from World of Warcraft. Recently, a movie based on the company’s World of Warcraft was released named Warcraft. Initially, the movie just earned $26 million in the opening week, but later it was reported that the movie has earned more than $280 million overseas.

Growth of gaming market

It is expected that the gaming market will reach $99.6 billion this year, and Activision, being the frontrunner, stands to benefit from it. Therefore, the company can reap huge profit from this great opportunity. Apart from these, the company’s acquisition of the King Digital Entertainment is already paying dividends.

Most significantly, Facebook recently signed a deal with Activision to stream Overwatch, World of Warcraft, and Hearthstone: Heroes of Warcraft game sessions to Facebook Live. The company would benefit massively from this as partnering with Facebook will result in free publicity of its games which could be more effective as compared to old-style advertisements.

Conclusion

Activision bulls should be confident about the company’s prospects going forward. Despite its meteoric rise, Activision still hasn’t run out of growth drivers. The aforementioned tailwinds can push the stock beyond the $40 in the coming months, making the stock a great pick.
Published on Jun 24, 2016
By Prudent Investor

Copyrighted 2016. Content published with author's permission.

Posted in ...