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Activision Blizzard: Still Undervalued

Roman Luzgin profile picture
Roman Luzgin


  • Activision Blizzard reported its Q3 earnigns, beating on revenue and EPS.
  • The company's Destiny 2 was launched in September, and now it is the best-selling console game of 2017.
  • The new Call of Duty and PC version of Destiny 2 will contribute to Q4 results.
  • Activision remains to be a solid investment.

Activision continues to impress

Destiny 2Activision Blizzard (NASDAQ:ATVI) has been one of the best-performing gaming companies over the last years, and Q3 results confirmed the company has a strong position in the video game market. Hence, the corporation beat expectations on both EPS and revenue, demonstrating more than 16% revenue growth year over year. Thus, it's now been six consecutive quarters in which the corporation delivered better-than-expected results.

ATVI earnings history(Source: Seeking Alpha)

Let us look at Q3 results in more detail.

During the three-month period ended September 30, Activision Blizzard generated $1618 million in revenue (GAAP), versus $1568 million earned during the same period last year. The improvement is seen in all revenue segments: product sales increased 8.2% and subscription, licensing and other revenues (where King was the biggest contributor) grew by 1.7% year over year.

It is interesting to note that Activision and King divisions of the corporation more than doubled their operating income, while Blizzard's performance was down year over year. Moreover, King generated almost the same amount of revenue as Blizzard ($528 million vs. $531 million, respectively), which means the mobile segment has become an even more crucial source of revenue for the company. It can be expected the mobile segment will remain to be a significant profit driver in the coming years.

Candy Crush franchise's gross bookings were up 17% quarter-over-quarter and up 22% year-over-year, bringing the franchise back to its strongest bookings since Q4 of 2013. King is making progress on their pipeline and new games as well. The social casino game in partnership with Playstudios is currently in live testing and is now expected to launch globally in early part of next year and a strong pipeline of full game releases are in development for next year and beyond.

Another positive point is the fact that

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.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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