Activision Blizzard (ATVI) Stock: Earnings In Focus

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Activision Blizzard, Inc. (NASDAQ: ATVI)

Activision Blizzard is having a rough start to the day today, and for good reason. The company reported its earnings for the fourth quarter of 2015. Unfortunately, ATVI missed expectations, creating concerns for investors. Today, we’ll talk about what we saw from earnings, how investors reacted to the news and what we can expect to see from ATVI moving forward. So, let’s get right to ti…

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Activision Blizzard Reports Q4 Earnings

As mentioned above, ATVI reported earnings for the fourth quarter after the closing bell yesterday. Unfortunately, both earnings and revenue came in below expectations. Here’s what we saw from the report:

  • Earnings Per Share – In terms of earnings per share, Activision Blizzard slightly missed expectations. In the quarter, analysts expected that the company would produce earnings in the amount of $0.86 per share. Unfortunately, the company only generated earnings in the amount of $0.83 per share for the quarter.
  • Revenue – Additionally, top-line revenue wasn’t any better. During the quarter, analysts expected that ATVI would produce revenue in the amount of $2.2 billion. The company actually reported revenue for the quarter in the amount of $2.12 billion. This not only misses expectations, but the figure is down about 4% year over year.
  • Q1 Guidance – Along with earnings, ATVI released guidance for the first quarter of 2016. For the quarter, the company expects to generate earnings around $0.11 per share. This came in below analyst expectations of $0.18 per share. In terms of revenue, the company expects to generate $800 million, well ahead of the $744.79 million analysts are expecting to see.

How The Market Reacted To The News

As investors, we know that there are few events that have the ability to move the needle in the market as much as earnings do. When earnings are positive, we tend to see a positive reaction and when earnings are negative, well, we see a negative reaction. That’s exactly what we’re seeing today.  Unfortunately, ATVI produced earnings and revenue below expectations. To top things off, guidance shows that first quarter earnings aren’t likely to be any better. So, investors are having a bit of a negative reaction. Currently (9:31), ATVI is trading at $26.68 per share after a loss of $1.84 per share or 6.03% thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a bit of a mixed opinion with regard to what we can expect to see from ATVI. The reality is that in the short run, investors are disappointed, and we’re likely to see more declines. On top of that, poor economic activity is likely to weigh heavy on the entertainment company. However, in the long run, my opinion is a bit different. The reality is that Activision Blizzard is a great company that does have the ability to get over a hurdle or two. With incredible games and the constant creation of new games, I don’t think that ATVI will struggle for very long.

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What Do You Think?

Where do you think ATVI is headed and why? Let us know your opinion in the comments below!

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