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Activision-Blizzard Stock Is Blasting Toward All-Time Highs

Activision Blizzard owns some of the best-known game franchises in the world

Video game maker Activision Blizzard (NASDAQ:ATVI) has been around since 2008 and is having one of its best-ever years in the face of the novel coronavirus. Activision-Blizzard stock is up more than 30% year to date.

Image of Activision Blizzard (ATVI) logo on a web browser on a mobile phone
Source: madamF / Shutterstock.com

The maker of the ever-popular Call of Duty franchise is already pushing all-time highs set in 2018. With more people staying at home as the new virus spins out of control, and with next-generation gaming consoles being released later this year, Activision Blizzard is a good bet to blast through that ceiling.

I’ve already declared Activision one of my seven best consumer stocks to buy. Now we’ll take a closer look at this popular gaming stock and the tailwinds that will continue to push it higher.

Activision-Blizzard Stock at a Glance

First released in 2003, Call of Duty may be Activision’s best-known franchise. It has released more than a dozen different versions on the game on PC’s as well as consoles like Sony’s (NYSE:SNE) PlayStation systems, Microsoft’s (NASDAQ:MSFT) Xbox and Nintendo’s (OTCMKTS:NTDOY) various platforms.

Activision keeps the first-person shooter game interesting by mixing things up — some versions of the game focus on World War II, while others were set in Russia. The most popular game in the franchise, Call of Duty: Black Ops, was released in 2010 and has sold 31 million copies.

The most-recent installment of the game, Call of Duty: Modern Warfare, was released in October 2019 and reportedly outperformed every game in the popular franchise in the first quarter, according to Forbes.

A part of the game — Warzone combat arena — was available online for free, which helped boost the franchises’ popularity even further. Call of Duty games also make money through in-game purchases and battle passes, providing a consistent revenue stream to help bolster Activision-Blizzard stock.

Other successful franchises for Activision include Candy Crush and World of Warcraft, but Call of Duty rules the roost.

When the PlayStation 5 and the Xbox Series X, both next-generation game consoles, are released this year, you can expect Call of Duty to get plenty of playtime on the upgraded consoles.

Earnings

Video game stocks and other home-entertainment stocks have done well this year as people are staying home during the Covid-19 pandemic. So not surprisingly, Activision-Blizzard stock investors enjoyed the company’s first-quarter earnings report.

Revenue of $1.52 billion was better analysts’ estimates of $1.32 billion. Earnings per share of 76 cents far exceeded estimates of 38 cents per share.

Activision said it had more than 400 million monthly active users in the first quarter as people stayed at home during the pandemic. Improved user engagement levels helped the company increase in-game spending by 20% in the quarter, totaling $956 million. That accounts for 63% of the company’s business, Activision said.

Daniel Alegre, Activision’s president and COO, told analysts the company is in a strong position: “We entered the year with strong momentum in some of our biggest franchises, which only increased further through the quarter. Our employees are showing remarkable dedication as they take on the responsibility of delivering the highest-quality content to our expanded communities.”

In light of the strong first-quarter results, Activision raised its full-year guidance. It’s now projecting $2.62 per share in adjusted profit on $6.8 billion in revenue, up from $2.22 per share and $6.45 billion in revenue.

The Bottom Line on Activision

Activision-Blizzard stock is only a few dollars shy of its 2018 all-time high of $83.75, but I’m expecting it to shatter that number soon.

The company’s gaming franchises — on mobile devices and gaming consoles — are incredibly strong. People will stay online and play as long as going outside to socialize remains a threat. And you can expect a renewed surge of gaming interest when Sony and Microsoft unleash their next-gen gaming consoles later this year.

Activision-Blizzard stock has an “A” rating in my Portfolio Grader right now, where it’s ranked as a strong buy.

Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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