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Is it Just a Dip in Activision Blizzard, Inc. (NASDAQ:ATVI)?

Activision Blizzard, Inc. (NASDAQ:ATVI) has been one of the most dramatic success stories in the tech sector over the past few years, with shares consistently rising sharply nearly every year of the present market cycle. But recent action has soured along with many other large-cap names, as shares have pulled back from over $80 to under $70.

To color recent action, the company recently announced that its Call of Duty: Black Ops 4 has sold more than $500 million in sell-through worldwide in its first three days of release as the total number of players climbed from last year. According to the release, “Through its first three days of release, Black Ops 4 set a new Call of Duty franchise record for most combined players, average hours per player and total number of hours played, on current generation consoles. The combined number of Black Ops 4 players across its three modes of play during those first three days tops both last year’s Call of Duty: WWII, as well as Call of Duty: Black Ops 3 (single player, multiplayer and zombies), respectively, for the same period of time.”

Activision Blizzard, Inc. (NASDAQ:ATVI) promulgates itself a company that develops and distributes content and services on video game consoles, personal computers (PC), and mobile devices.

The company operates through three segments: Activision Publishing, Inc.; Blizzard Entertainment, Inc.; and King Digital Entertainment. The company develops, publishes, and sells interactive software products and entertainment content for the console and PC platforms through retail and digital channels, including subscription, full-game, and in-game sales, as well as by licensing software to third-party or related-party companies; and offers downloadable content.

It also maintains a proprietary online gaming service, that facilitates the creation of user generated content, digital distribution, and online social connectivity in its games; and develops and publishes interactive entertainment content and services primarily on mobile platforms, such as Android and iOS, as well as distributes its content and services on the PC platform primarily through Facebook.

In addition, the company engages in creating original film and television content; and provides warehousing, logistics, and sales distribution services to third-party publishers of interactive entertainment software, as well as manufacturers of interactive entertainment hardware products.

Its products include various genres, including first-person shooter, action/adventure, role-playing, strategy, and others.

The company continues to release big name titles that typically gross hundreds of millions in sales within days of initial market placement.


Off and Running

Activision Blizzard, Inc. (NASDAQ:ATVI) pulled in sales of $1.6B in its last reported quarterly financials, representing top line growth of 0.9%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($4.9B against $2.1B).

We started off by noting that ATVI recently hit the wires with the announcement that its Call of Duty: Black Ops 4 has sold more than $500 million in sell-through worldwide in its first three days of release as the total number of players climbed from last year.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action ATVI shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -10% on above-average trading volume.

All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities as the stock tests key support within the technical framework of an ongoing larger timeframe upward trend in share prices.

This is particularly true given the start we have seen for the company’s newest market asset.

“Black Ops 4 is off to a blockbuster start. Our player counts and hours played are up year over year, our viewership on Twitch has set new standards and is showing just how fun Blackout is to play and to watch, and the weekend results yet again put Call of Duty at that highest tier of entertainment,” said Rob Kostich, EVP and GM, Call of Duty. “Our digital sales results have been record-breaking across all platforms, and the overall performance strong. We’re really excited about Black Ops 4’s momentum. There’s much more to come, we’re just getting started.”

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