Activision Blizzard collapsed after reporting. What do investors not like?
Shares of one of the largest companies in the computer games industry, Activision Blizzard, have become noticeably cheaper after the publication of the report for the third quarter. This is no reason for panic, analysts think. They advise buying shares
Screenshot of the Diablo computer game
American Holding, one of the world's largest representatives of computer games and entertainment, reported Activision Blizzard for the third quarter with a decline in total revenue to $ 1.5 billion, 7% less than the same quarter last year's results . Net profit increased by 38% annually to $ 260 million, according to the company's message. Shares are collapsed by 10%.
There are fewer players
Activision Blizzard quarterly earnings per share was $ 0.52, while analysts expected it to be $ 0.50. And if the results for the quarter coincided with the predictions of experts, the company expects to earn less in the next quarter: Activision Blizzard lowered its expectations for earnings per share from $ 1.34 to $ 1.03.
At the same time, the company reported a decrease in the number of active users of its products to 345 million people per month in the third quarter, compared with 352 million in the second quarter of 2018. It became known that the publisher was not satisfied with the results of the recently released game Destiny II: the financial performance was lower than planned.
What drove investors further away
Earlier this week at BlizzCon 2018 – Blizzard's annual festival, which as a rule announced new projects – the company presented a reconsideration of the classic strategy of Warcraft III. In 2019, 17 years after the release of the original version, Warcraft III: Reforged appears. This is an updated game with Ultra HD graphics, new sound and network support. If this news was warmly welcomed by the public because of nostalgic feelings, another planned release disappointed the players.
During the festival, the company announced a new project in the game universe Diablo, which will appear on smartphones. The company explained the release of Diablo: Immortal with the desire to win a teen audience that mainly plays on mobile devices.
Not everyone was happy with the news about the new mobile game. Most fans of the series did not remain satisfied, because they expected the release of Diablo IV, a full-fledged new head of the cult computer game.
What to do with stocks
Activision Blizzard effects have fallen in price since the beginning of October when co-founder and president of Blizzard, Michael Morheim, announced that he would leave the post. Morheim worked in the company for more than 27 years.
Immediately after the announcement of his departure, Activision Blizzard, which was founded in 2008 as a result of the merger of Vivendi Games holding company, including Blizzard, started off with Activision. Shares continue to fall and are now at the lowest values since the end of 2017.
Despite all the negativity around the company, Barclays analysts have recently maintained a positive outlook on Activision Blizzard. Experts see a growth potential of around 24% in them.
Almost the same level shows the consensus prediction of analysts, given Refinitiv. None of the nearly 30 experts believe that equities are worth selling. Sales recommendation remains.