Time to Buy Activision Blizzard Stock

Videogame maker and interactive entertainment content producer Activision Blizzard (NASDAQ: ATVI) stock is trading at the low end of a 10-point consolidation range. The pandemic was a powerful tailwind as stay-at-home mandates caused a surge in gaming. Investors are nervous about the reversion effect of the reopening. Back to school and work means less time for gaming. However, the new normal appears to continue to be fruitful for gaming companies as mobile, next-gen console players, and eSports continue to expand. This was evidenced in its Q1 2021 earnings report indicating the highest monthly active users (MAUs) in the Company’s history despite any new game releases. The Company has a pipeline of the richest legacy brands and new titles ready to roll out in upcoming quarters which should continue to accelerate growth. While the guidance reversion may have caused a dampening response, Activision may be setting the bar low with strong momentum heading into the latter part of the year. Prudent investors can watch for opportunistic pullbacks to scale into a position.

Q1 FY 2021 Earnings Release

On May 4, 2021, Activision released its fiscal first-quarter 2021 results for the quarter ending March 2021. The Company reported earnings-per-share (EPS) profits of $0.79 beating analyst estimates for $0.65, by $0.14. Revenues rose 36% year-over-year (YoY) to $2.07 billion beating $1.77 billion consensus analyst estimates. The Company had 435 million MAUs for the quarter, the highest in history. Legacy brands including Call of Duty, World of Warcraft, and Candy Crush performed strong. The Activision segment grew 72% YoY driven by Call of Duty: Black Ops Cold War and Warzone. The free-to-play and mobile experiences lead to a new record of 150 MAUs in Q1 and Call of Duty franchise MAUs grew 40% YoY. The April season is the top-grossing to date. Blizzard grew 7% YoY led by World of Warcraft’s Shadowlands expansion. Blizzard had 27 million MAUs in Q1. King mobile segment saw 22% YoY growth driven by strong Candy Crush growth with 258 million MAUs in Q1. King also grew 70$ YoY in advertising net bookings in Q1.

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