Activision Blizzard stock forecast: Microsoft deal under scrutiny
Shares of the California-based gaming company Activision Blizzard (ATVI) enjoyed a boost this year owing to its much-anticipated $69bn takeover by Microsoft (MSFT).
The move was announced in January 2022 and is now under regulatory scrutiny in multiple jurisdictions, including the US, UK and EU.
Despite news of the antitrust probes, ATVI stock remains relatively unfazed, and is up close to 6% on a one-month basis and over 15% year-to-date (YTD) as of 24 November 2022.
Live ATVI Stock Price Chart
Keeping the stock-moving news in mind, we take a look at the company’s latest quarterly financial performance, ATVI stock news, and other factors that are shaping the ATVI stock forecast in 2022 and beyond.
What is Activision Blizzard?
Activision Blizzard is an interactive gaming and entertainment company, headquartered in California’s Santa Monica in the US. The firm was established in 2008 following the merger of Vivendi Games and Activision.
Some of the company’s most popular games are Candy Crush, Call of Duty, World of Warcraft, Overwatch, Hearthstone and Diablo.
Activision Blizzard stock analysis
The ATVI stock price rose by nearly 15% year-to-date as of 24 November, significantly outperforming the S&P 500 Index (US500), which has dropped 15% this year.
The price has slumped, however, by more than 28% from its all-time high of $102.70, achieved on 12 February 2021.
Over the past five years, the ATVI stock price has surged 19.5%. However, over a one-year period, the share price has declined marginally by 0.5%.
Activision Blizzard’s latest earnings
Activision Blizzard reported GAAP revenues of $1.78bn for Q3 2022 – down from $2.07bn in the second quarter of 2021.
Revenues from digital channels stood at $1.61bn while GAAP operating margin was 27% in the quarter. GAAP earnings per diluted share were $0.55, compared to $0.82 a year ago.
The firm said it had made “strong progress on a broad pipeline of content across established franchises” in the second quarter. It is also planning to release new Call of Duty, World of Warcraft and Overwatch content later in 2022.
Despite the company’s promising pipeline of new games, its total monthly active users (MAUs) continued to decline in the quarter, falling to 368 million from 390 million in the year-ago period.
Looking ahead, the company expected GAAP revenue and earnings per share (EPS) to remain lower on a year-over-year basis. “Segment revenue and operating income are expected to return to strong year-over-year growth in the fourth quarter following the successful launch of Modern Warfare II,” the company said.
The company expects a “return to strong growth” on the back of several recent game releases:
Following its 28 October launch, Call of Duty: Modern Warfare II has broken records as the fastest-selling title in the history of the Call of Duty franchise. At Blizzard, the 4 October free-to-play launch of Overwatch 2 has driven community engagement to new highs. These results build on the recent strong launch for Diablo Immortal and a substantial content rollout under way for World of Warcraft. At King, the Candy Crush franchise again delivered a record performance.”
Microsoft takeover under CMA investigation
Meanwhile, the ATVI stock is caught in a whirlwind of uncertainty as the proposed Microsoft takeover is under threat of investigation by the UK’s antitrust regulator. The outcome of the takeover proposal is likely to be the main factor shaping the Activision Blizzard stock forecast.
Microsoft announced its all-cash acquisition agreement valued at $68.7bn for Activision Blizzard in January 2022. The takeover would be the second-largest tech deal ever made, only exceeded by Dell Technologies (DELL) acquiring EMC for $74bn in 2016.
Microsoft planned to acquire Activision Blizzard for $95 per share, which included Activision Blizzard’s net cash. With the acquisition, Microsoft is expected to become the world’s third-largest gaming firm in terms of revenue, behind only Tencent and Sony.
However, the British antitrust regulator Competition and Markets Authority’s (CMA) expressed concerns about the merger, which led to widespread tension among investors.
The CMA said that the deal would hamper competition in gaming consoles, cloud gaming, and subscription services.
The antitrust regulator warned that if Microsoft refused to give competitors such as PlayStation maker Sony (SNE) access to Activision Blizzard’s popular gaming titles, for example, it would take a toll on healthy rivalry in the industry.
Mirosoft has repeatedly claimed that it intends to keep Call of Duty on PlayStation.
In a recent statement to Verge, the Microsoft boss said that Call of Duty will remain on PlayStation for “at least several years more beyond the current contract”.
Jim Ryan, Sony’s CEO, was not impressed with the proposal, saying that “Microsoft has only offered Call of Duty to remain on Playstation for three years” after the current agreement expires, which he called “inadequate on many levels”, according to a report by the Financial Times.
Activision Blizzard still expects to finalise the acquisition deal by June 2023.
US FTC likely to file lawsuit to block MSFT bid
The US Federal Trade Commission (FTC) is likely to file an antitrust lawsuit to block Microsoft’s $69bn takeover bid for Activision Blizzard, Politico reported on 23 November, citing people familiar with the matter.
A lawsuit challenging the deal is not set in stone, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, the report said, adding that the FTC staff reviewing the deal are skeptical of the firms’ arguments.
“We are committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but won’t hesitate to fight to defend the transaction if required,” an Activision Blizzard spokesperson told Reuters. Any suggestion that the transaction could lead to anticompetitive effects is “completely absurd”, the spokesperson added.
EU antitrust probe to reach decision on Microsoft-Activision deal by March 2023
The deal is also facing scrutiny in the EU, which opened a full-scale investigation into the acquisition earlier this month, according to Reuters. The EU competition enforcer said it would decide by 23 March 2023 whether to clear or block the deal.
“The Commission’s preliminary investigation shows that the transaction may significantly reduce competition on the markets for the distribution of console and PC video games, including multigame subscription services and/or cloud game-streaming services, and for PC operating systems,” the European Commission said in a statement on 9 November.
“The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-à-vis Microsoft’s rival distributors of console video games,” it added.
Activision Blizzard stock forecast for 2023 and beyond
Analyst ratings compiled by MarketBeat shared different price targets for the Activision Blizzard stock. The consensus rating was a "moderate buy" based on 17 analyst ratings as of 24 November.
Out of the 17 analysts covering the stock, nine rated it as a "buy’, while the remaining eight rated it a "hold." The consensus Activision Blizzard stock forecast for 2023 was $94.28, ranging from the low price target of $83 to a high of $100.
According to the algorithm-based Activision Blizzard share price forecast from WalletInvestor, as of 24 November, the stock price could reach an average price of $81.31 in December 2023.
The site’s ATVI stock forecast for 2024 saw it rising to $87.36 by the end of December that year. The service suggested the stock could trade at $93.23 by the end of 2025. In its Activision Blizzard stock forecast for 2026, WalletInvestor saw the stock climbing to an average price of $99.15 by the end of December that year.
The site did not provide Activision Blizzard stock predictions for 2030.
When looking for Activision Blizzard stock forecasts, it’s important to bear in mind that analyst and algorithm-based predictions can be wrong and shouldn’t be used as a substitute for your own research. Always conduct your own due diligence on the stock before trading, and never trade money you cannot afford to lose.
FAQs
Is Activision Blizzard a good stock to buy?
Analyst ratings compiled by MarketBeat shared different price targets for the Activision Blizzard stock. The consensus rating was a “moderate buy” based on 17 analysts’ ratings as of 24 November. Out of the 17 analysts covering the stock, nine rated it as a buy, while the remaining eight rated it a hold.
Note that analyst predictions can be wrong. Always do your own due diligence into a company and its stock before making an investment or trading decision. And never invest or trade more than you can afford to lose.
Will the Activision Blizzard stock price move higher?
MarketBeat analysts’ consensus Activision Blizzard stock forecast for 2023 was $94.28, ranging from the low price target of $83 to a high of $100.
Remember that analysts can and do get their forecasts wrong. Always do your own research before making an investment decision. And never invest or trade more than you can afford to lose.
Should I invest in Activision Blizzard stock?
Whether you should invest in ATVI should be based on your risk tolerance, experience in the markets, investing goals and view of the stock. Always conduct your own due diligence, looking at the technical and fundamental analysis, latest news and market commentary. Remember that past performance does not guarantee future returns, and never trade money you cannot afford to lose.
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