Partnerships with NetEase and Tencent
Activision Blizzard (ATVI) has a long-standing partnership with China’s (FXI) NetEase (NTES) that has now spanned 11 years. ATVI has expanded this partnership to publish games in China until January 2023. China is the largest gaming market in the world and continues to grow quickly.
ATVI has also partnered with Tencent for Call of Duty Mobile in China. These partnerships will give Activision Blizzard access to over 700 million Internet users in the country. They should also help stall the decline in the company’s number of monthly active users and increase user engagement, which can be monetized later.
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Global esports spending could reach $1.1 billion in 2019
Fortnite has taken the gaming world by storm with its battle royale mode. Peer Electronic Arts (EA) has also ventured into the battle royale genre with Apex Legends. However, Activision Blizzard is focused on mobile gaming and esports.
Global esports spending is estimated to increase 26% to $1.1 billion this year. ATVI is a market leader in this space, as it was one of the first companies to launch an esports league with Overwatch. ATVI’s Overwatch League now has 20 teams.
Wedbush optimistic about Activision Blizzard
Investment bank Wedbush expects ATVI to outperform analysts’ estimates in 2019. It expects the company to post EPS of $2.40 this year, ~10% higher than analysts’ average estimate of $2.20. Wedbush has also estimated sales of $6.7 billion for the company, higher than the average estimate of $6.4 billion.
Wedbush analyst Michael Pachter said, “Activision Blizzard is well-positioned to deliver significant outperformance in 2019 and outsized growth in 2020. Upcoming catalysts may include: Upcoming game announcements and launches, continued digital revenue growth, growth in esports viewership, contribution from King advertising, quarterly results, and guidance.”
Five Below (FIVE) stock rose 3.5% as of 3:04 PM ET today after J.P. Morgan upgraded its rating for the retailer to “overweight” from “neutral.”
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.