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Why Investors Are Optimistic about Activision Blizzard

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Dec. 4 2020, Updated 10:52 a.m. ET

Growth in sales and profitability

As in the table below shows, analysts have estimated an absolute revenue growth rate of 67% for Activision Blizzard between fiscal 2014 and fiscal 2019. Analysts expect Activision Blizzard’s (ATVI) revenue to rise from $4.81 billion in fiscal 2014 to $8.03 billion in fiscal 2019. Comparatively, Activision’s EBITDA (earnings before interest, tax, depreciation, and amortization) are estimated to more than double from $1.6 billion in fiscal 2014 to $3.23 billion in fiscal 2019.

The absolute growth rates for operating profit and net income stand at 105% and 90%, respectively, for fiscal 2014 to fiscal 2019.

Growth in business segments

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Activision Blizzard has three business segments: King, Activision, and Blizzard Entertainment. ATVI acquired King Digital in 2015, and this business has been the number-one mobile publisher in the United States. King has experienced YoY (year-over-year) revenue growth despite a decline in monthly active users over the last few quarters.

Investors are banking on Activision’s games such as Call of Duty, Destiny, and Crash Bandicoot to drive user engagement and increase the customer base for the company this fiscal year. Blizzard’s gaming portfolio includes Diablo, Overwatch, Hearthstone, and World of Warcraft. Overwatch has generated over $1 billion in revenue for Activision Blizzard to date, and it has over 35 million registered players.

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