On November 8, Activision Blizzard missed analyst expectations and announced a decline in active players.On November 6, Activision Blizzard announced mobile game Diablo Immortal to a strong negative reaction from fans of the Diablo series.Since then, what are some of the events that have happened? I had also noted that while the valuation was reasonable, it was certainly not a bargain, and that companies like Activision Blizzard will have lumpy performance given the hit/miss nature of video games. Activision Blizzard also had a clean balance sheet, and a history of using it on an opportunistic basis. ![]() In my original report, I observed that CEO Robert Kotick was an exceptional CEO who simply knew how to make money and position Activision Blizzard to take advantage of growing trends such as eSports. My colleague Benjamin Klein reminds me of the human tendency towards confirmation bias, so the first step should be to review your arguments when initially researched. Did we misjudge the quality of the business? Did we overpay? Or is the market simply being irrational? These are not mutually exclusive questions. As I previously wrote, the appropriate reaction to a declining share price depends on the underlying cause. ![]() Still, a loss is a loss, and this is as good a time as any to re-examine our thesis. Shares of Electronic Arts (another major video game publisher) are also down 25%. In fairness, the stock market as a whole was also down significantly throughout the last few months of 2018 with tech stocks as a whole faring even worse shares of leading technology companies such as Apple, Netflix, Amazon, and Facebook all dropped at least 20% during this time period.
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