Invest Idea for Shares Activision Blizzard
Activision Blizzard, Inc. – One of the leading American and global manufacturers of computer games. The headquarters of the company is located in Santa Monica, California. The company was established in 2008 by the merger of two major American developers and publishers of computer games Activision and Blizzard, each of whom had already had many years of experience and a well-known brand in the computer game market. In 2016, the United Company acquired another major American king game developer. Today united Activision Blizzard holding loudly announces its mission “Association and passion of the world with its outstanding entertainment.”
Activision Blizzard game: Activision Blizzard will join Microsoft Ticker (Exchange): ATVI (NASDAQ) Sector and Industry: Media and Entertainment / Entertainment. CAPITALIZATION OF THE COMPANY: $ 63.99 billion
Activision Blizzard owns the world franchises known to Call of Duty, Warcraft, Starcraft, Candy Crash, Diabolo, Overwatch, Hearthstone and rights to a number of other well-known console games and video games from Activision’s united , Blizzard and king. The total cost of the company’s portfolio company is estimated at $ 3 billion in 2021, the volume of the global video game market has reached $ 93 billion, an increase of 7.3% over the year, with the maximum share of this market (26%) provide video games in the United States.
According to the analytical portal Gamesindustry, the share of video games from Activision Blizzard studios in 2021 was 3% of the global video game market, and for the global video game market in 2021 Activision Blizzard held 3rd place after Chinese Corporations TENCENT (7.8 % global market) and NETEASE (3.3% of the market). And according to Google, in 2021, the name of the Call of Duty gaming brand was among the top ten most popular search queries, which indicates the widespread world famous brands from Activision Blizzard.
Shares price At the time of preparation of the idea: $ 82.15 per share Purpose: $ 105 per share Expected profitability: 28%
Fundamental analysis
Arguments in favor of price increase of the company:
Future joining Microsoft. Microsoft announced its intention to acquire 100% of Activision Blizzard at a price of $ 68.7 billion or $ 95 per 1 share. After the acquisition of Microsoft will be the third game company after Tencent and Sony, and the transaction itself can contribute to the development of fashionable technologies “methawned” computer games today. On the day of the purchase announcement 1, Activision Blizzard shares was estimated at $ 65.39 by the market, that is, Microsoft would have acquired Activision Blizzard if it took place on the same day, with a 45% premium to the market price of the company acquired, which reflects its potential Growth.
Very strong financial results. Activision revenue Blizzard for 9 months of 2021 increased by 17% to $ 6.64 billion, and at the end of the 3rd quarter of 2021, the company showed the growth of revenues by 6% to $ 2.07 billion, mainly due to strong growth in the mobile game segment. Net profit of 9 months increased by 26% to $ 2.14 billion, increased by 5.8% to $ 639 million, and free cash flow for the first 9 months of 2021 grew by 45% to $ 2.8 billion. The operating profitability of the company for the 3rd quarter amounted to 41%, the EBITDA margin reached 44.6%.
Termination of a corporate scandal. in 2021 The top management of Activision Blizzard was in the focus of a large public scandal, as a number of former employees of the company accused some of the top managers in sexual harassment and discrimination against women in the level of salaries, and also publicly called for the resignation of the Director General of the Corporation of Bobby Citics, which, in their opinion, , obliged to be responsible for the unworthy behavior of some of his subordinates. “Personnel cleaning” in the top management of the corporation did not help complete the scandal, as the victims demanded The dismissal of the general director. The upcoming Activision Blizzard joining Microsoft has already actually put an end to the corporate scandal. Bobby Catik, as already announced, will continue to work in the United Companies, but will already be subject to the head of the Microsoft game division. The scandal in 2021 contributed to the fall of Activision Blizzard shares by 26%, but its termination and future merging with Microsoft are good signals to buy stock shares.
The underestimation and growth potential. Company in terms of P / S (capitalization ratio to revenue) is estimated with a discount almost 51% to the analogues, according to P / E and EV / EBITDA indicators are estimated by 44% and 54% cheaper than analogs, respectively. Current price levels look attractive for purchase.
Investment risks. The main investment risk during the next year can be theoretically refusal to Activision Blizzard from joining Microsoft or a breakdown of a transaction for other reasons (we recall that this decision in 2022 should approve the general meeting of Shareholders of Activision Blizzard and approve regulators). In addition, failure to implement the launch of new products can also negatively affect the company’s shares.
Technical Analysis
Activision Blizzard shares on announcement day that Microsoft buys a company (January 18, 2022), breaking through the resistance of $ 72.1, increased by 26%, and the bidding closed at $ 82,31. After such growth, investors can fix profits, and the action can roll back to $ 70-72 for paper, and when negative news is on, for example, the process of implementing the transaction is delayed, roll back Even slightly lower than $ 65 per share. Reducing the action can be a good reason to purchase shares for a long time. During the year, the action can grow to $ 105 for paper.
Promotions for
One of the main growth drivers for Activision Blizzard shares is the expected joining to Microsoft. The company’s business is successful, profits and highly profitable, from which it follows that its shares have a solid potential for growth, however, purchasing paper should take into account all the risks associated with the fact that the access transaction should be taken into account Companies to Microsoft may not take place.
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