Choppy Activision Blizzard, Inc Will Regain Its Proper Form

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ATVI - Choppy Activision Blizzard, Inc Will Regain Its Proper Form

Source: Gamevil Inc. via Flickr

If there is such a thing is a no-brainer in the markets, I’d go with video game manufacturers like Activision Blizzard, Inc. (NASDAQ:ATVI). Transitioning from a nerdy, adolescent hobby to a full-fledged multi-billion dollar industry, video games have shaped our popular culture. Along the way, ATVI stock went from afterthought to a market powerhouse.

I’m incredibly bullish on video games as a whole.

Not only do we have viable opportunities like ATVI stock, but the ecosystem expands significantly outwards. For instance, consumer technology firms Microsoft Corporation (NASDAQ:MSFT) and Sony Corp (ADR) (NYSE:SNE) are not primarily video game companies. However, they’ve made significant revenues and established strong brand presence with their high-end gaming consoles.

On top of that, we have industries that really didn’t exist when video games first gained traction in the 1980s and 1990s. I speak, of course, about gaming tournaments, or eSports.

Before I get into it, let me clarify: Video game tournaments did exist in yesteryear. For instance, check out the Fred Savage classic, The Wizard. (Don’t judge me!) My point is that these events didn’t enjoy mainstream recognition, or respect.

Today, the entire gaming landscape has changed. As our own Tom Taulli explains, the eSports industry is a multimillion dollar affair. In just two years, experts predict it will breach the billion-dollar threshold. Naturally, ATVI wants their piece of the pie, and they’re getting it.

ATVI forwards many of the most popular titles in these e-tournaments, particularly the shoot-em-up games. That alone should drive the bull case for Activision stock.

However, with the recent market crisis, and the resultant shift towards safety, even good names are in turmoil. But if you’re worried about Activision stock, I have good news: You can ride this chop confidently.

Ignore the Noise and Focus on ATVI Potential

On the surface, I can see why investors are hesitant to pull the trigger on ATVI stock, or any opportunity. The Dow Jones has been whipsawing like a yo-yo. It’s hard to determine if a recovery is on the way, or if this is a bull trap.

I’m not going to pretend I understand the day-to-day noise the markets emit. What I do understand is that old industries and platforms are fading, and that new ones are taking their place. Video games aren’t just a billion-dollar entertainment showpiece; instead, they’re changing social customs.

A major reason why Mattel, Inc. (NASDAQ:MAT) was gutted in recent years is due to video game popularity. Kids today immediately gravitate towards digital entertainment as soon as they’re physically able. When they’re in their pre-teen years, they’re already experts in the latest console games. Invariably, ATVI titles are among those games, subsequently making Activision stock a tremendous opportunity.

Not only that, entire nations favor greater video gaming acceptance and integration. A case in point is Japan, where I mentioned that Prime Minister Shinzo Abe’s administration advocates full legalization of video game tournaments. With Japan having such a rich, digital culture, this political move is longer-term a net positive for ATVI stock.

Most importantly, you have to consider the enormous ATVI brand name leverage. Citing independent, third-party research firms, as well as Activision’s internal estimates, two ATVI titles — Call of Duty WWII and Destiny 2 — were last year’s top-selling games.

More impressive? Call of Duty was released last November. If that doesn’t at least spark some interest towards Activision stock, I don’t know what will.

ATVI Can Do What It Wants

One of Activision’s overlooked attributes is that its core offerings are largely “self-generated.” Take a look at the company’s most popular video games. With the exception of the Tony Hawk skateboarding series, these are fantasy or fictional titles.

This attribute is particularly enticing for prospective buyers of Activision stock. Rival firm Electronic Arts Inc. (NASDAQ:EA) relies on its vast, sports licensing portfolio for its dominating success. The formula works, and will continue to work, but it’s expensive. Also, game designers are under pressure to make the next offering just different enough to justify upgrading.

ATVI has no such pressure. Of course, they have to push the envelope just like any other game-maker. But the difference is that they can do so by simply changing the scenery. The Call of Duty series has shifted from World War II, to modern-day warfare, to space combat, and back to World War II.

Essentially, Activision can do whatever it wants to do. So long as they don’t lose the plot entirely, their loyal fanbase will eat it up. If all else fails, then simply add more blood, guts, and gore. Why wouldn’t you want to take a good, hard look at ATVI stock?

As of this writing, Josh Enomoto is long SNE.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.


Article printed from InvestorPlace Media, https://investorplace.com/2018/02/choppy-activision-blizzard-inc-atvi-stock-will-regain-proper-form/.

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