I have been bullish on Activision (ATVI, Financial) for a few months, and the stock has shot up about 30% in the meantime. Despite the strong upward movement, Activision may have more room to run heading into the earnings report. Investors should continue holding on to the stock.
Activision is doing a great job
In the most recent quarter, Activision publicized 544 million monthly active users for its three platforms, Activision, Blizzard and King. Furthermore, the company detailed that its Activision user count reached 55 million, a surge of 10%.
"Call of Duty" plays a significant role in taking Activision to great heights and is still not displaying any signs of slowing down. It has accomplished a record number of franchise monthly active users, or MAUs.
In the case of Blizzard, its user accounts surged 23% year over year. "Hearthstone" has touched 50 million players, receiving an 88 rating on Metacritic. Furthermore, its latest title, "Overwatch," is performing even better than "Hearthstone" as it received a rating of 91 and managed to appeal to 7 million players in just eight days following the release date.
Escalating users is a remarkable thing for the company and in turn for investors, but the actual measure of any game’s success is engagement. The games from Activision and Blizzard are exclusive for mobile games as they need extended attention periods. When these games seize their users, however, they can anticipate more engagement. Going by the initial success, it is bound to play out well for Activision.
Acquiring King was a great move
In the case of the King acquisition, the worst-case scenario for Activision was its inability to produce new games after the launch of "Candy Crush." That is part of Activision’s motivation for buying the company. Since the acquisition, King has access to the video game brands Activision has spent years producing and promoting and the prior tactics on creating content grounded in the latter’s brands.
With the acquisition, King has new prospects for producing even superior games for its huge player network by uniting Activision Blizzard’s top performing IPs on console and PC with its mobile expertise. Moreover, King has already started working hard with Activision Blizzard to explore those opportunities. As an outcome, King’s creating a prosperous game that could make huge profits and will help Activision grow further and improve its position in mobile gaming.
Conclusion
Going forward, it looks like Activision still has more juice left and can continue moving higher. Although the company is trading just 8% under its 52-week high, the stock can still move higher.
Disclosure: I don't hold a position in any of the stocks mentioned in the article.
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