Hot gaming stock to watch: Activision Blizzard, Inc. (NASDAQ: ATVI)

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Activision Blizzard, Inc. (NASDAQ: ATVI) stock rose over 5.6% on 6th May, 2020 (as of 12:41 pm GMT-4 ; Source: Google finance) after the company posted better than expected earnings for the first quarter of FY 20 mainly due to overperformance for Call of Duty: Modern Warfare throughout the quarter, including a highly successful start for thr new free-to-play Call of Duty: Warzone.

The company has reported first-quarter net income of $505 million compared to $447 million in the year-ago period. Activision has reported increase in net bookings to $1.52 billion compared to $1.26 billion a year ago while the analysts had expected it to be $1.32 billion. The company posted better-than-expected results for its key franchises as populations are staying at home turned to its various titles for entertainment and social connection. In response to the COVID-19 pandemic, the company said its staff had moved to work from home in mid-March but expects to deliver a robust slate of content over the remainder of the year.

Furthermore, after an industry-leading launches for Call of Duty Mobile and Modern Warfare in the fourth quarter of 2019, the company raised the bar even higher with the launch of Warzone in March. With the free-to-play business model and cross-platform play, Warzone has expanded Modern Warfare’s reach, engagement and player investment. Warzone has to date has brought in over 60 million players since its launch. Blizzard also delivered strong growth in the first quarter, driven by World of Warcraft. After doubling in the second half of 2019, the WoW active community grew further in Q1. At King, Candy Crush was again the top grossing game franchise across US app stores with engagement increasing sharply toward the end of the quarter.

ATVI in the first quarter of FY 20 has reported the adjusted earnings per share of 76 cents, beating the analysts’ estimates for the adjusted earnings per share of 38 cents.

Moreover, Activision revenue grew 64% year-over-year to $519 million, driven by Call of Duty: Modern Warfare and Warzone in-game revenues, strong game sales of premium Modern Warfare and the addition of Call of Duty Mobile. Blizzard revenue rose 31% to $452 million year-over-year due to strong growth for World of Warcraft and the release of Warcraft III: Reforged in the quarter. King’s revenue is of $498 million, which is roughly flat sequentially and lower year-over-year

Activision expects full-year 2020 earnings to be of $2.22 a share on sales of $6.8 billion.

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