Activision Blizzard: Great Buying Opportunity

Roman Luzgin profile picture
Roman Luzgin


  • Activision Blizzard established the Overwatch League to gain from e-sports.
  • The company sold the first seven teams, receiving about $140 million of unexpected revenue. It is estimated 21 more teams will be sold.
  • Therefore, Activision is likely to beat earnings in 2017.
  • I updated my model to take into account the recent events.

During its last earnings call, Activision Blizzard (NASDAQ:ATVI) set guidance of $6.3 billion in revenue for full 2017. However, the company is very likely to beat earnings. The main reason for this is the sale of seven Overwatch teams, which was not taken into account by the company when it provided the guidance during Q1 earnings call. Therefore, a buying opportunity has arisen. I will analyze it in this article, providing my updated valuation of the company.

Q1 earnings and guidance

First of all, it is necessary to analyze what was achieved in Q1 2017 and what was the guidance of Activision Blizzard’s management.

The company reported $1.73 billion of generated revenue, which represented 19% increase year over year. This led to a beat by $640 million on revenue and $0.28 on EPS. The main reason for this was the success of Blizzard’s Overwatch, which allowed the division to increase sales by 50% year over year. It is estimated nearly 2.2 million players have been joining the game every month, which means about 6.6 million new gamers were likely to have purchased the game in the three months since the last earnings report. Moreover, a significant milestone of 30 million players was surpassed in May, and, as a result, the game has generated over $1 billion since the release.

(Source: Polygon)

In addition, King’s revenue grew by hefty 129%, leading to an overall mobile and ancillary revenue increase of 95%.

During the earnings call, the company’s management provided its outlook for Q2 and full 2017. Here it was stated net revenues were expected to amount to $1.43 billion in Q2, with $0.38 EPS (including $0.11 GAAP deferrals recognition). The average analysts’ estimate on Yahoo Finance predicts $0.3 EPS in Q2 and $0.48 in Q3 2017. Activision provided the list of the main

This article was written by

Roman Luzgin profile picture
I write about growth opportunities in different sectors related to technology, providing analyses of fundamentals that are driven by current and future trends. Senior Data Analyst by day, I am building and managing my own portfolio of tech-related securities, which to date has consistently beaten the market.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in EA, ATVI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (32)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.