PR is not enough to stop the falling knife of Activision Blizzard (NASDAQ: ATVI)

As the world becomes more connected, it apparently also becomes less patient. Some companies like Activision Blizzard, Inc. (NASDAQ: ATVI), learns this the hard way.

Despite positive results, the market seems to be punishing the company that announced not one but two delays for some of its most popular products.

See our latest analysis for Activision Blizzard

Q3 Earnings results

  • Non-GAAP EPS: $ 0.72 (beaten by $ 0.02)
  • GAAP EPS: $ 0.82 (beaten by $ 0.14)
  • Income: 1.88 billion USD (in-line)
  • Revenue growth: + 6.22% Å / Å

The overall results were solid with an increase in net bookings (US $ 1.88 billion vs. US $ 1.77 billion), with consistent bookings in the game of US $ 1.2 billion. Operating cash flow also increased to DKK 521 million. USD.

However, the company is conservative in the 4th quarter predictions that guide the net bookings of 140 million. USD under consensus of 2.92 billion. USD and below expectations to 8.79 billion. USD for the full year for the same amount. Eventually, the bomb exploded when the company announced the launch of two of its major franchise games, Overwatch 2 and Diablo IV.

This is a significant setback, as Overwatch was one of the best-selling games of all time, while the Diablo series is one of the best-known in history spanning four decades.

What is the option in Activision Blizzard?

According to our assessment, the intrinsic value of the stock is $ 107.50, but it is currently trading at US $ 77.67 on the stock market, which means that there is still room to buy.

Another thing to keep in mind is that Activision Blizzard’s stock price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe that the current stock price should move towards its intrinsic value over time, a low beta may indicate that it is unlikely to reach that level soon, and once it is there, it may it can be hard to fall back into an attractive shopping range again.

What does the future hold for Activision Blizzard?

earnings-and-revenue growth
NasdaqGS: ATVI Earnings and Revenue Growth November 3, 2021

Future prospects are an important aspect when buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it is the intrinsic value in relation to the price that matters most, a more convincing investment thesis would be a high growth potential at a reasonable price.

With profits expected to grow by 23% over the next few years, the future looks bright for Activision Blizzard, albeit slow. It appears that there is a higher cash flow on the cards for the stock, which should give a higher stock rating.

What does it mean to you:

While ATVI was hit by a brand image in recent months, the company is improving the situation.

CEO Bobby Kotick recently took a significant pay cut, promising a $ 250 million investment over the next decade in gaming and technology initiatives that provide opportunities for under-represented communities.

However, PR work can only do so much. The cash flow depends on whether the company sells its products or not – and what has not yet been released can not be sold.

Are you a shareholder? Think about the time horizon of your investment. If you are an avid gamer, you might have an extra edge over the investment community when it comes to gaming stocks. With an optimist outlook on the horizon, it appears that this growth has not yet been fully recognized in the share price. However, there are also other factors such as Capital structure to consider, which could explain the current underestimation.

Are you a potential investor? Are you willing to predict where the stock may bottom out? Are you ready to wait and possibly calculate an average of enrollments in your position? Do you have better investment options right now?

Before making any investment decisions, you need to consider other factors such as its management team track record to make a well-informed investment decision.

Since timing is quite important when it comes to individual stock selection, it is worth taking a look at what the forecasts of recent analysts are. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Activision Blizzard, you can use our free platform to view our list of 50 other high-growth stocks.

Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no positions in any of the aforementioned companies. This article is of a general nature. We only provide comments based on historical data and analyst forecasts using an impartial method, and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any shares and does not take into account your goals or your financial situation. We aim to bring you long-term focused analysis driven by basic data. Please note that our analysis may not take into account the latest price sensitive company announcements or qualitative material.

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