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Activision Blizzard's Controversy: Punished Too Hard

Jan. 05, 2022 10:09 AM ETActivision Blizzard, Inc. (ATVI)27 Comments
InvestOhTrader profile picture


  • Despite being bombarded by negative catalysts, Activision Blizzard continues to have a positive outlook from analysts.
  • Its efforts to increase revenue from its mobile platform position the company well to capitalize on the growing mobile game market.
  • It benefits from its strong balance sheet and growing projected free cash flow, which can be reasons for shareholder value improvement.
  • ATVI enjoys positive insider trading and is trading cheaply at 19.74x earnings.

E3 Gaming Conference Begins In Los Angeles

Kevork Djansezian/Getty Images News

Activision Blizzard (NASDAQ:NASDAQ:ATVI) is one of the world's largest video game publishers operating in America, EMEA, and Asia Pacific. It has been in the industry for over 40 years and has a portfolio of popular franchises such

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InvestOhTrader profile picture
Hi there! I am an equity research analyst by profession but a trader by heart, with a background in accounting. I try my best to be a responsible investor, guided by my expertise in fundamental and technical analysis. I enjoy surfing and riding the trends about equity, currencies and cryptocurrency. With a little over 5 years of experience in the market, I enjoy keeping my mind open to fresh ideas from different investment viewpoints since it allows me to expand my knowledge in this wild, but always energizing investing industry. PS. I apologize if I am unable to respond to your feedback immediately. However, when I have free time, I read through it all and enjoy reading both positive and negative feedback. Thank you!

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Comments (27)

Persaltish profile picture
I used to play World of Warcraft. It was fun. Therefore this is a great stock...

Well, maybe...

But this is a business that has faltered a lot lately. They are late with important new releases and they have a very angry portion of their workforce demanding the CEO's head on a platter. I suspect they are having a hard time hiring top talent right now and we know they are losing talent in the meantime.

There is a really simple fix to the talent problem: Fire Kotick. BUT, he's actually been a great CEO in some ways so his departure would create another new crisis. But, they have to do something fast or watch their once great enterprise bleed out. If they dump Kotick and bring in a young genius they might have a chance. Or they might die fast. But if they do nothing, I think they will die slowly. That would be a shame. All the more because I own some stock.
Mozman profile picture

I dont think so. They should hold the line and ignore the wok folk. They might still fail but if wok folk win nobody will want to play their games.
The Beautyful One profile picture
@Persaltish If blood is in the water, do you also expect the sharks to leave if you throw in a bloody steak?
12 Jan. 2022
@Mozman They are pretty good at alienating consumers on their own. Their strategy only works because of the brand strength of COD, Overwatch, Wow and Diablo etc. If they lose their best people because no one wants to work in a toxic environment, they are going to lose more gamers as those games suck more and more over time.

EA, and Activision are really bad long term buys in my opinion because they lack new promising IP, and many of their blockbusters fall on their face. This was all prior to the lawsuits. If you think of their workers as a cost line on a balance sheet you're going to wake up with stale investments in a couple years.
Pet peeve: You should back out the net current assets when calculating P/Es. It's lazy to take the market cap and divide by earnings without backing out net current assets. On 9/30 ATVI had $8B in net current assets -- mostly cash -- far more than the working capital needed to run the business. Imagine how high ATVI's P/E would be if they had $100B on the balance sheet if you calculated P/E this way. Anyhow, the P/E is probably ~17x right now, which is very cheap for a business like this, whereas ~20x seems cheap, but not as cheap. Just my two cents.
jerseyvalueinvestor profile picture
@fshoutofwtr why do people need to remove net current assets from PE. Please elaborate, you can apply this concept to most tech companies to get a p/e well over 100. so with your method most tech compnies have insane valuation right?
Go woke, go broke. Long ATVI
Mozman profile picture

Nerve bet against the orcs!
06 Jan. 2022
Sell. AAA P2E crypto games are coming hard
@uhoh Jesus and Mary Jane my friend. Your one-liner cannot be taken as an advice.

There are many stocks that should be sold today. ATVI is not one of them.
jerseyvalueinvestor profile picture
@uhoh disagree, im long splinterlands a p2e game, i dont see these small players unseating AAA game developers, more likely AAA game devs come into p2e and blow away any game relying on graphics to be popular, thats why i like Splinterlands, a strategy card game, not reliant on fancy graphics.

Now those space based p2e games, those are all going to ZERO when AAA game studios enter the space
13 Jan. 2022
@jerseyvalueinvestor don't know what u r talking about. Splinterlands is trash
This company was doing mass layoffs even before the recent scandals. It seems ill. The punishment of the stock price seems justified. If the firm turns around quickly, the stock could be a good buy at these prices. I remain skeptical.
Long $ATVI
Hanno profile picture
Well, valuation is cheap vor atvi. One should know what's the problem here! Maybe aTVI is part of the tech sell off?
The Beautyful One profile picture
The problem with ATVI is not a PR problem, though it may seem that way. The chaos in the company creates an execution problem. The talented people mostly have left or are in the process of leaving. The company is burdened with a bunch of activists that it can't get rid of due to said PR problem. Look at the pipeline of products and how they have been delivered/are in the process of being delivered. If ATVI manages to fail basic execution on their CoD blockbuster (such as basic collision detection etc.), it means that the 5 % of people that are relevant to a companies success are vanishing rapidly. This is also in line with what you hear through insider rumors. At the moment Bobby does not care and will do anything to survive, even if it means throwing his company under the bus short-term (in his mind). The problem is, this cultural change and the people that remain will do lasting damage. The talent is moving to smaller companies, what remains is loudmouth activists and mediocracy. It does not bode well for a company that depends on technical excellence and creativity.
@The Beautyful One Wow this is a very good comment. I was talking to my wife about buying some ATVI and this comment really resonated with our decision making process. Thank you
The Beautyful One profile picture
@ocbearclaw Well, considering how ATVI is apparently hammered today, luckily you did not buy yet :-)
Mozman profile picture
@The Beautyful One

I hope your wrong because if the orcs go and only the faeries remain, this company is a goner.
"Key people have confirmed leaving"

While on the surface, that's a bad thing. However, another way to look at it is this, younger, hungry employees will now be able to move up and gain control of more creativity. This could be a massively positive outcome for a company that may have been relying too heavily on rehashing old games.
Mick Research profile picture
"ATVI enjoys positive insider trading.."

Didn't that happen before the recent scandal? I haven't seen any insider buying in the last few months.
Thanks for the work. Observation - My first glance at a very reliable site does not suggest material insider buying! Yes Peter buys 3,950 Shares in Aug 21 - But Robert K (Bobby) Sells a few hundred thousand $$ in shares in the same month. It's not my money so I don't feel a need to study that aspect much closer... Appreciate the article and comments.
It's becoming value amongst growth
I bought atvi 60 bucks
Too cheap to ignore and strong balance sheet. All the noise can be fixed overtime . Their titles and franchise has lots of followers and fans
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