Is it too much to expect, that a good company, with good fundamentals and a strong balance sheet, that creates and produces products that are in demand worldwide, should see upward price movement in their stock when one of their products shatters all previous records for single day sales? Apparently so:
Earlier this month, Activision/Blizzard (Nasdaq: ATVI) released its highly anticipated Call of Duty®: Black Ops. "The biggest entertainment launch ever with an estimated sell-through of approximately $360 million in North America and the United Kingdom alone in the first 24 hours of its release, as compared to last year's estimated day-one sell-through of $310 million for Call of Duty: Modern Warfare® 2in North America and the United Kingdom, according to internal Activision estimates." (source: NY Times)
And guess what happened to its stock price, after sell 5.9 million copies in one day through North America and the United Kingdom:
Zilch... zero... bupkus...
Still languishing around the $11.00 mark, continuing the funk the shares fell into after its 2 for one split in September of '09.
"There has never been another entertainment franchise that has set opening day records for two consecutive years and we are on track to outperform last year's five-day global sales record of $550 million," said Bobby Kotick, CEO, Activision Blizzard, Inc. "The game's success underscores the pop culture appeal of the brand. Call of Duty: Black Ops is the finest game that Treyarch has ever made and raises the bar for online gameplay by delivering the deepest and most intense Call of Duty experience yet. The Call of Duty franchise has over 25 million players around the world that are engaged in billions of hours of online gameplay, and we are committed to supporting them with new content and features on a more frequent and regular basis."
The holiday shopping is fast upon us, the retail sector has shown its best quarter in years, yet you can buy 50 shares of this company's stock for less than one share of Google.
So, where is the disconnect? Why is the value of this fine company so heartily ignored, when all of the signs are pointing in such a positive direction?
I have no answer, but it is troubling to think that investors, like myself, who do the research and choose investments based on sound judgement, rather than speculation, are not always rewarded in kind.
Disclosure: Long ATVI