Activision Blizzard (NASDAQ: ATVI) is one of the world’s top gaming companies.
It’s basically three companies in one at this point.
There’s Activision that says it has four of the top 10 gaming titles on the market (on next-gen consoles, life-to-date) including Call of Duty, Destiny and Skylanders.
Its Blizzard division has another stable of popular titles including Diablo, World of Warcraft, HearthStone and StarCraft.
Its recently acquired King has opened up the mobile market and brought on a slew of new names to sell their other products to. King built Candy Crush, Pet Rescue and other viral mobile games.
At this point, ATVI has more than 500 million monthly active users and 42 billion annual hours of entertainment across all its platforms. While Activision makes up about 60% of ATVI’s revenue, the acquisition of Blizzard and King have given ATVI a much broader base of user access.
Its Q1 numbers show how well ATVI continues to grow, even in this sluggish economy. Revenues for the quarter were up 20% year over year, and 80% if you include the addition of King.
King not only gives ATVI access to almost half a billion mobile users, but it also gives it some global reach. The U.S. has been the epicenter of gaming, but it’s now spreading across the globe and ATVI is well positioned to take its games global.
At this point, about 52% of ATVI revenue comes from the U.S., 36% from Europe and 12% from Asia. Expect the number outside the US market grow in coming quarters.
The stock is up 5% year to date, but it’s up 27% in the past 6 months and continues to keep its upward momentum. That is the opportunity I see.
Granted, this sector has some serious competitors including Electronic Arts Inc. (NYSE: EA) and Microsoft Corporation (NASDAQ: MSFT), but ATVI has grown by acquisition in the past few years and now is showing that it knows how to deploy these resources so that ATVI is greater than the sum of its parts.
The other good thing about this sector is games aren’t high-end purchases, so they are delinked from global economic forces. Plus, this is a younger demographic, so if they have to put off the newest edition of a game, they will likely still find something cheaper on mobile to keep their attention.
ATVI has survived as a focused gaming company for quite a while now, regardless of the major competitors throwing shade its way. And by broadening its base and products across various markets it will remain a significant force in this space.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
