To The Moon

$Activision Blizzard(ATVI)$ 

This is my top stock in my portfolio due to its strong performance.

Activision Blizzard press release (NASDAQ:ATVI): Q4 Non-GAAP EPS of $1.87 beats by $0.36.

Net bookings of $3.57B (+43.4% Y/Y) beats by $390M.

For the quarter ended December 31, 2022, overall Activision Blizzard Monthly Active Users (MAUs) were 389 million.

For the quarter ended December 31, 2022, Activision Blizzard’s net bookings were $3.57 billion, as compared with $2.49 billion for the fourth quarter of 2021. In-game net bookings were $1.82 billion, as compared with $1.24 billion for the fourth quarter of 2021.

Activision Blizzard is a leading global developer and publisher of interactive entertainment content and services. The company develops and distributes content and services on consoles, PCs, and mobile devices. It generates revenue from full-game and in-game sales, as well as by licensing software to third-party companies that distribute Activision Blizzard products. Its gaming properties include the World of Warcraft, Candy Crush, Call of Duty League, Hearthstone Masters, Overwatch League, Diablo, etc.

Investment Overview

Leading game developer with popular gaming franchises globally. Activision Blizzard has industry- leading titles and owns famous intellectual properties like Call of Duty, Candy Crush, and World of Warcraft, which accounted for c.80% of revenue in 2021. These top franchises should enable the company to drive user acquisition and recurrent consumer spending in various countries, leading to stable revenue growth in the longer term.

Increasing live service to drive further in-game monetisation. Activision Blizzard is well positioned to capitalise on its game properties via live service offerings, which allow players to access and invest in new content and increase engagement. Currently, live service (or in-game purchase) revenue makes up 38% of total revenue, mainly contributed by Candy Crush. The continuous focus on in-game content and live service development will generate higher revenue with a higher margin.

Focus on mobile gaming to catch the growth trend. Activision Blizzard's mobile games only accounted for 7% of total revenue in 2021, and the company has increased its development efforts into expanding game franchises to mobile platforms, like the release of the mobile version of Call of Duty, Crash Bandicoot in 2021, and Diablo Immortal in 2022. We expect mobile games to become a significant revenue growth engine in the coming years, driven by the robust mobile game pipeline and increasing addressable audiences.

Risks

(1) Decrease in gross billings of existing key titles due to weakness in consumer spending amid the inflation environment and (2) the performance of new games falling short of expectations.

Potential share price catalysts include (1) stronger performance of its mobile division, like Diablo Immortal, and (2) better-than-expected earnings increment from live services.

As one of the leading gaming provider in theword, I think it is going to buck the trend and perform well in this year due to its strong gaming portfolio and fan base. I remain confident in this stock even if the Microsoft dealfalls through.

@TigerStars 

DYODD