Investors may want to buy the dip in Activision Blizzard (ATVI).
For one, video game sales show no signs of cooling off. In fact, in the second quarter of the year, according to GameSpot.com, “U.S. video game spending in the second quarter of 2021 has increased 2% to $14 billion over the same period in 2020. According to the NPD Group, overall consumer spending on video games for April to June 2021 totaled $14 billion, a small increase over last year’s massive numbers, which were boosted by the pandemic.”
Even better, by 2024, according to analysts at Newzoo, the global gaming market could be worth more than $200 billion, as reported by VentureBeat.
Two, companies like ATVI are still producing incredible earnings.
For the quarter ended June 30, ATVI’s “net revenues presented in accordance with GAAP were $2.30 billion, as compared with $1.93 billion for the second quarter of 2020. GAAP net revenues from digital channels were $2.03 billion. GAAP operating margin was 42%. GAAP earnings per diluted share were $1.12, as compared with $0.75 for the second quarter of 2020. On a non-GAAP basis, Activision Blizzard’s operating margin was 44% and earnings per diluted share were $1.20, as compared with $0.81 for the second quarter of 2020.”
Three, analysts at Citi recently upgraded the stock to a buy rating with a price target of $105. They believe the company has already priced in recent negatives, including the potential for Chinese crackdowns on gaming.
In addition, ATVI insiders seem bullish. In fact, ATVI Director Peter Nolan just recently bought $2 million worth of stock between August 5 and 9.
With plenty of bullish news to support upside, use weakness as an opportunity.