With Activision-Blizzard (NASDAQ:ATVI) stock near its all-time highs, investors want to know how much growth, if any, is left. Markets have rewarded stocks of companies during the pandemic which provide goods and services for the ‘new normal’. People are staying inside much more and avoiding crowds. And consumers love screens, big or small. The ‘new normal’ has changed our lives for the time being.
Thus, consumers are streaming more shows providing a boost to service providers including Netflix (NASDAQ:NFLX) . We are also playing more games as the pandemic forces us to remain inside. Activision-blizzard has had a great year thus far, partly due to this unique set of circumstances. However, investors should not fear that this alone is responsible for Activision’s current trajectory. The company has plenty of tailwinds set to propel it forward whether a vaccine is released tomorrow, or a year from now.
Activision-Blizzard Stock on a 2020 Tear
Activision shares began 2020 at $58.65 and have risen to $81.27 as of this writing. Thus, shares have risen over $20 and over 38% year-to-date. Yet, ATVI shares traded at an all-time high of just over $83 which is bound to inspire trepidation on the part of investors. The company had strong first quarter earnings with current expectations being 67 cents per share in Q2. Markets should have little to worry about regarding its shares in the short term.
Further, analysts rate Activision’s shares a consensus buy which should inspire confidence among investors. Price targets have a median value of $81, and range to a high of $93. Markets may be headed toward that higher figure given a resurgence of coronavirus cases among other factors. People will likely be spending lots more time indoors in the near future.
Additionally, Activision will release second quarter earnings on Aug 4, which are slated to be strong. Again, the recent resurgence of coronavirus cases may push earnings appreciably higher.
New Console Releases Equal Sales
Activision benefits from a range of massively successful titles well-known to gamers the world over. The company boasts titles including Call Of Duty, Overwatch, Diablo, StarCraft, and Candy Crush among others. These game series are among some of the most successful titles ever.
New console releases are a prime catalyst for share price appreciation. Both Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) will be releasing new consoles in the fall. Microsoft’s Xbox Series X, and Sony’s Playstation 5 next generation platforms will both release some time in the holiday season. Gamers will purchase plenty of Activision-Blizzard titles which are sure to bolster its top line.
Activision is Deeply Integrated in a Growth Industry
The company is at the center of an industry that is expected to show a compound annual growth rate of 14.9% from 2018 to 2023. Activision Blizzard Esports operates eSport gaming leagues for its popular titles including Overwatch, Call of Duty, and StarCraft among others. Potential ATVI investors should be pleased that these titles are industry leaders.
Activision owns 3 of the 10 biggest eSports tournament games (4) scheduled for 2020. The Hearthstone World Championship, Overwatch World Cup, and the Call of Duty League Championship all feature ATVI titles. Producers of these events are continuing to find clever ways to profit from the popularity of eSports. And whether these tournaments are rescheduled due to the pandemic or not, ATVI shares should continue to benefit from eSports.
In conclusion, Activision-Blizzard shares are a buy in my mind. The company has strategized well. Investors should give Activision credit for its success. It doesn’t seem to be due to luck or circumstances. Activision creates games and experiences that consumers truly enjoy. Activision’s success in doing so has lead to profits. So, despite the fact that prices are near all-time highs, the company deserves investors’ attention.
Alex Sirois did not own shares of any of the aforementioned stocks at the time of this writing.
