Activision Blizzard, Inc. ATVI reached a new 52-week high of $32.50 on Sep 25, closing a bit lower at $32.05. Shares have been rising since Sep 15 when the company launched its latest game, Destiny: The Taken King.
This latest offering from Activision has added fuel to the bull-run that began when the company was included in the S&P 500 index on Aug 27.
The Taken King was welcomed warmly by gamers, as evident from the number of players on day one which not only surpassed that of the base version, Destiny but also crafted a new record of highest downloads on Sony’s SNE PlayStation consoles on the launch day of any game.
Investors’ confidence was up as a higher number of paid-downloads means higher margins for the company. Additionally, robust demand for the Destiny franchise also reduced the company’s dependence on a handful of mega franchises (Call of Duty, World of Warcraft and Skylanders) for generating maximum revenues.
Moreover, its addition to S&P 500 also reinforced investors’ confidence in the company. In fact, in the year-to-date timeframe, Activision has performed well above the S&P 500, having returned nearly 60% in contrast to a decline of 6.2% for the index. In the past 30 days, upward estimate revisions have also pushed up the Zacks Consensus Estimate for 2016 by 2.7% to $1.50 per share.
In order to drive demand for its game titles, Activision has adopted a two-pronged strategy, as apparent from the marketing of the Destiny franchise. Aggressive pricing along with unyielding focus to roll-out new content more frequently has increased engagement levels. Activision has priced The Taken King at $40 while offering the ‘Legendary Edition’, consisting of Destiny’s base game and all three available expansions, for a mere $60.
Therefore, not surprisingly, apart from being the most downloaded game on the PlayStation, The Taken King also garnered most concurrent players for the ‘Destiny Universe’.
In addition, the company has also seen strength in some of its other titles like Guitar Hero, which remains a positive. Activision also has a strong lineup for the near future. For instance, this November the company is expected to release yet another game, Call of Duty: Black Ops 3, which should add more momentum to this Zacks Rank #1 (Strong Buy) company.
A strong product portfolio, we believe, also gives an edge to Activision over peers like Electronic Arts EA, Take-Two Interactive Software Inc. TTWO and Glu Mobile, Inc.
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