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Activision Blizzard to Report Q1 Earnings Today: What Awaits?
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Activision Blizzard, Inc. is set to report first-quarter 2020 results on May 5 after market close. The coronavirus-led stay-at-home orders have boosted in-app sales and may help the gaming giant report an uptick in user engagement and audience numbers.
In-games Spending to Boost Top Line
Per the March 2020 NPD report, consumers in the United States have spent $1.597 billion on gaming hardware, new full games, and accessories and game cards. And being a prominent player in the gaming world Activision Blizzard, may have benefited from this at-home entertainment rush.
In fact, NPD’s report indicates that Activision Blizzard’s Call of Duty: Modern Warfare was the top-selling game in 2020 through March, giving tough competition to Nintendo Co., Ltd.’s (NTDOY - Free Report) Animal Crossing: New Horizons. The game also ranked first in March 2020 NPD: Top 10 Xbox One Games. In fact, after releasing only in March, this new free-to-play battle royale game has attracted more than 50 million players.
The already-famous Call of Duty franchise and Overwatch encouraged in-games spending. For example, players need to the buy battle pass for Warzone. Additionally, the availability of these games in PS4, Xbox One and PC during the quarter is expected to have boosted sales amid lockdowns.
What’s more, the company’s Blizzard plays a vital role in eSports. Even if we ignore the boost offered by COVID-19 lockdowns, eSports has been growing in popularity in recent years. Now, with stadiums shut down, major sports leagues in the United States are promoting eSports like never before.
In the mobile gaming arena, Candy Crush remains one of the most popular Android games despite being launched years ago. In fact, Candy Crush has a major share in total revenues as mobile gaming has increased by 24% since the lockdown was initiated.
Competition & Expenses to Weigh on Bottom Line
Although a strong game franchise may have boosted sales, strong competition from gaming giants like Electronic Arts Inc. (EA - Free Report) , Take-Two Interactive Software, Inc. (TTWO - Free Report) and Zynga Inc. may have a negative impact on the company’s revenues.
What cannot be overlooked is that the novel coronavirus has boosted active user engagement. Hence, players are looking for new Warzones and innovative features in every version. Once they cannot find anything new, they tend to shift to other games from competitors. Hence, the company has to keep upgrading games and this means higher operating expenses. Development of new features, enhancing gameplay experiences and marketing, all are likely to have kept margins under pressure.
Especially for a company like Activation Blizzard that that gets an annual game release, pressure is high as they could look active engagements. CEO Bobby Kotick in an interview earlier has said that employees who are working remotely have been asked to upgrade to the highest-speed broadband service, which will be paid for by the company. In fact, many employees have been granted permissionto take their computer home.
Summing Up
While companies in other sectors have seen a downturn due to the coronavirus epidemic, the stay-at-home orders have helped gaming companies including Activision Blizzard. The company’s shares have gained 11.3% so far this year compared to the S&P 500’s decline of 12.4%.
The Zacks Consensus Estimate for Activision Blizzard’s first-quarter earnings is 39 cents per share. It had reported earnings of 31 cents a year ago. The Zacks Consensus Estimate for revenues is $1.32 billion. It had reported $1.26 billion in revenues in the year-ago quarter.
Activision Blizzard’s expected earnings growth rate for the current quarter is 25.8% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of nearly 20%.
Activision Blizzard has an Earnings ESP of +10.4% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Activision Blizzard to Report Q1 Earnings Today: What Awaits?
Activision Blizzard, Inc. is set to report first-quarter 2020 results on May 5 after market close. The coronavirus-led stay-at-home orders have boosted in-app sales and may help the gaming giant report an uptick in user engagement and audience numbers.
In-games Spending to Boost Top Line
Per the March 2020 NPD report, consumers in the United States have spent $1.597 billion on gaming hardware, new full games, and accessories and game cards. And being a prominent player in the gaming world Activision Blizzard, may have benefited from this at-home entertainment rush.
In fact, NPD’s report indicates that Activision Blizzard’s Call of Duty: Modern Warfare was the top-selling game in 2020 through March, giving tough competition to Nintendo Co., Ltd.’s (NTDOY - Free Report) Animal Crossing: New Horizons. The game also ranked first in March 2020 NPD: Top 10 Xbox One Games. In fact, after releasing only in March, this new free-to-play battle royale game has attracted more than 50 million players.
The already-famous Call of Duty franchise and Overwatch encouraged in-games spending. For example, players need to the buy battle pass for Warzone. Additionally, the availability of these games in PS4, Xbox One and PC during the quarter is expected to have boosted sales amid lockdowns.
What’s more, the company’s Blizzard plays a vital role in eSports. Even if we ignore the boost offered by COVID-19 lockdowns, eSports has been growing in popularity in recent years. Now, with stadiums shut down, major sports leagues in the United States are promoting eSports like never before.
In the mobile gaming arena, Candy Crush remains one of the most popular Android games despite being launched years ago. In fact, Candy Crush has a major share in total revenues as mobile gaming has increased by 24% since the lockdown was initiated.
Competition & Expenses to Weigh on Bottom Line
Although a strong game franchise may have boosted sales, strong competition from gaming giants like Electronic Arts Inc. (EA - Free Report) , Take-Two Interactive Software, Inc. (TTWO - Free Report) and Zynga Inc. may have a negative impact on the company’s revenues.
What cannot be overlooked is that the novel coronavirus has boosted active user engagement. Hence, players are looking for new Warzones and innovative features in every version. Once they cannot find anything new, they tend to shift to other games from competitors. Hence, the company has to keep upgrading games and this means higher operating expenses. Development of new features, enhancing gameplay experiences and marketing, all are likely to have kept margins under pressure.
Especially for a company like Activation Blizzard that that gets an annual game release, pressure is high as they could look active engagements. CEO Bobby Kotick in an interview earlier has said that employees who are working remotely have been asked to upgrade to the highest-speed broadband service, which will be paid for by the company. In fact, many employees have been granted permissionto take their computer home.
Summing Up
While companies in other sectors have seen a downturn due to the coronavirus epidemic, the stay-at-home orders have helped gaming companies including Activision Blizzard. The company’s shares have gained 11.3% so far this year compared to the S&P 500’s decline of 12.4%.
The Zacks Consensus Estimate for Activision Blizzard’s first-quarter earnings is 39 cents per share. It had reported earnings of 31 cents a year ago. The Zacks Consensus Estimate for revenues is $1.32 billion. It had reported $1.26 billion in revenues in the year-ago quarter.
Activision Blizzard’s expected earnings growth rate for the current quarter is 25.8% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of nearly 20%.
Activision Blizzard has an Earnings ESP of +10.4% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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