Company Profile
Activision Blizzard Inc is a public listed company on the Nasdaq Stock exchange since 2015. The blizzard stock is one of the stocks that make up the S&P 500 Index. It is a globally acclaimed entertainment industry that makes video games and other entertainment content. The company operates through its subsidiaries Activism, King, and Blizzard. It is famous for its gaming franchise, including Candy Crush, Call of Duty, World of Warcraft, Diablo, etc.
The Modus Operandi of Activision Blizzard
The company is developing and distributing video games and related services on consoles, PC and smartphones. It also earns through esports leagues and digital advertising.
Through a series of M&A deals, the company expanded in the video gaming sector and formed Activision Blizzard in 2008. Activision Blizzard is now a major player in the video game industry with net revenue of $8 billion and a net income of $2 billion. The market capitalization is $63.34 billion as of September 3, 2021.
Activision Blizzard Future Outlook
Let us look at the impact Covid had on the gaming segment. The restrictions on outdoor movement resulted in demand for gaming. While many other sectors were affected due to lockdowns, companies like Activision Blizzard’s revenue and profits increased, thanks to the addition of 100+ million new players in its Call of Duty franchise. The growth was also because the company offered free to play on mobiles, PCs, and game consoles.
Presently, the company has 400+ million users and aims to increase it to 1 billion users in coming years by replicating its free-to-play model on other gaming franchises. The company expects higher revenues from the live services and improves its top and bottom-line results.
Why is Blizzard Activision Stock a Good Buy?
The blizzard stocks are among the few stocks on Nasdaq that are actively traded. At the current level of around $81.31, it is looking attractive at current levels. This is almost near to its 52-week low of $74.75. Though it has gone up from $47 to $103.31 in August 2021, thanks to its strong financial performance, the stock is still a good buy as the company is forecasted to increase its user base for its blockbuster franchises.
What Factors Caused Blizzard Entertainment Stock To Go Up?
Thanks to the company’s good performance, the blizzard stock grew 113%, from $47 in 2018 to $103 in 2021. It reported an increase in its revenue from $6.5 billion in 2019 to $8.1 billion in 2020. The net margins also increased to 27.2% compared to 24.6 % in 2018. The earnings per share grew by 17% to $2.85 in 2020 compared to $2.43 in 2018. The p/e ratio also increased due to higher earnings and is now trading at 33 times in 2020 compared to 19 in 2018. The average PE multiple for the recreation industry is 39.30. This clearly shows that the stock is trading at a level with ample scope to go up.
Based on the current valuations, the EPS of 2021 is expected at $3.80 compared to $2.85 for 2020. The company is expanding its footprints in gaming franchisees. Its projected earnings growth is expected to double from 18% in 2020 to 36% in 2022. The company’s cash reserves are at a healthy $6 billion, which makes it poised for more M&A deals in the future.
The recommendation for Activision blizzard stocks is based on the fact that this stock is presently undervalued, and investors can buy blizzard stock for long-term gains.
