Q2 20 Earnings Report
Seeking Alpha Analyst Since 2014
Summary
- Q2 20 Earnings Report.
Investment Thesis – Why You Should Buy Activision Blizzard
I have a BUY rating on Activision Blizzard (NASDAQ: ATVI) with a TP of $89. ATVI-US has seen a boost in user engagement across major titles and the rest of its portfolio due to recent stay-at-home restrictions. ATVI may continue to outperform its peers if management can sustain the following factors: produce high quality content to keep users engaged, execution of strategic initiatives, successful transition to online and mobile, and deeper engagement in the Asia-Pacific region. Investors have every right to question the sustainability of ATVI’s 2Q20 results. Player base grew 30% YOY in 2Q20 reaching over 400mm. Net bookings was $2.08B as compared to $1.21B in 2Q19 – 72% YOY. In-game net bookings was $1.37B compared to $778MM in 2Q19 – 76% YOY. I believe the results are sustainable given ATVI’s upcoming releases from Tony Hawk’s Pro Skater, WOW: Shadowlands expansion pack, Crash Bandicoot 4 & COD Warzone 6. Management is focused on providing consumers high quality content on a consistent basis to sustain high levels of engagement. Doing so could possibly grow the player base to 1 billion users in the foreseeable future. As global economies await vaccine and economic recovery, the gaming industry is a good space to invest in as they have benefited from cyclical downturn. Particularly ATVI given its leadership in a fragmented industry. With its large player base, robust portfolio of games and new content in the pipeline, ATVI is in a solid position to keep the strong earnings momentum alive through 2022.
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