Categories Analysis, Leisure & Entertainment

Activision Blizzard (ATVI): Three reasons why this stock deserves to be on your radar

For the full year of 2021, net bookings are expected to be $8.65 billion while revenue is estimated to be $8.51 billion

Shares of Activision Blizzard Inc. (NASDAQ: ATVI) were up 1.6% on Thursday. The stock has dropped 14% since the start of the year. The company has been in the news lately for all the wrong reasons and this has hurt the stock but it is still seen as a strong performer with good opportunities for growth. Here are a few right reasons why this stock deserves your attention:

Strong user growth and engagement

Activision Blizzard continues to see strong user growth and engagement driven by strength in its core franchises as well as the introduction of new features. Although there has been a slight slowdown in the pandemic-fueled momentum as people have started venturing out, the company is still holding strong.

At the end of the second quarter of 2021, Activision Blizzard had 408 million Monthly Active Users (MAUs). The introduction of the free-to-play model within the Call of Duty ecosystem helped drive the number of users three times higher than the second quarter of 2019.

Activision Blizzard Q2 2021 earnings infographic

In-game player investment remained strong and although in-game net bookings were lower than the year-ago quarter, they were around four times higher than the level seen in the second quarter of 2019. Net bookings amounted to $1.92 billion in Q2 2021. These factors helped drive net revenue of $2.30 billion in Q2, up 19% from the year-ago quarter.

For the third quarter, net bookings are expected to be $1.85 billion while revenue is expected to be $1.97 billion. For the full year of 2021, net bookings are expected to be $8.65 billion while revenue is estimated to be $8.51 billion.

Strong portfolio

Activision’s core franchises remain strong as ever. The company’s sales in the Call of Duty franchise for Q2 2021 was higher than for all of 2019. Engagement levels remained strong even as regions reopened. Retention remained high from Q1 to Q2 for users and time spent across Black Ops Cold War, Modern Warfare, and Warzone on console and PC.

Net bookings for Call of Duty Mobile grew double-digits both year-over-year and sequentially. Net bookings for World of Warcraft grew double-digits year-over-year in Q2 and it is on track for much stronger engagement this year. Within the King segment, Candy Crush was the highest grossing game franchise in the US app stores.

New releases

The company has a strong line-up of new games which are expected to drive growth over the coming years. Diablo II Resurrected will launch on PC and console this month while the launch of Diablo Immortal is slated for the first half of next year.

Call of Duty Mobile is on track to exceed $1 billion in consumer spending for the year and the company is working on a new mobile title within the Call of Duty universe that is expected to drive significant growth going forward.

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