Reload Activision Blizzard stock before earnings strike

If you are a firm “buy at the dip” kind of investor, check out Activision Blizzard (ATVI) before the first quarter earnings announcement, scheduled for aftermarket on Thursday. The stock has been down as much as 17% after hitting an all-time high in March this year. The gaming giant has a reputation for providing conservative earnings outlook and then shooting down street consensus. So a bounty may be in the making.

The first quarter is generally a weak one for the gaming giant. Add to that it did not have any major releases during this period. However, the Activision division is set to announce some strong figures, riding on the popularity of two versions of the Call of Duty franchise – World War II and Black Ops 3. While user engagement continues to be strong for Black Ops 3, released in 2015, World War II got some great in-game content, making it the most popular console game of 2017.

Investors will also be watching how much Epic Games’ Fortnite has dented Call of Duty and Overwatch sales. If the actual results are less damaging than the rumors, ATVI bulls may give the stock a boost.

The Blizzard side is also pretty strong, thanks to the massive interest generated by Overwatch League, launched in January this year. This is extremely encouraging for a unit that has been posting over 40 million Monthly Active Users consecutively in the past six quarters. On the other hand, Monthly Active Users rose 12% sequentially for Activision in the fourth quarter to a record 55 million gamers.

Investors will also be watching how much Epic Games’ Fortnite has dented Call of Duty and Overwatch sales.

Meanwhile, a slowdown in the casual gamer base in King Digital has been an area of concern. This slowdown had dragged Activision Blizzard’s overall audience down about 14% to 385 million by 2017-end.

Video-gaming behemoth is also reportedly planning to diversify its business, in line with Disney (DIS), to monetize its wide array of products through merchandise as well as various media channels. Investors will also be keen on collecting clues regarding the same during the earnings conference call.