Activision Blizzard (ATVI) Miss Q1 Earnings, Call of Duty Demand Wanes

Trade ATVI Stock Your Capital Is At Risk
Ollie Martin
Updated: 25 Apr 2022

Key points:

  • The company reported Q1 revenue of $1.8B and EPS of $0.64
  • Financial performance had dropped from Q1 last year, with revenue, EPS and overall bookings all lower
  • Lower Call of Duty interest and growing costs surrounding the Microsoft deal weighed on growth

Activision Blizzard (NASDAQ: ATVI) – the gaming company responsible for gaming knockouts Call of Duty and World of Warcraft -announced lackluster first-quarter earnings this morning, missing top and bottom lines due to weaker performance for Call of Duty, product cycle timing at Blizzard and surmounting fees regarding the company’s planned sale to Microsoft that was announced in January.  The market hasn’t reacted aggressively; ATVI shares are currently trading with a small premarket loss off 0.46%. 

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 The company reported Q1 revenue of $1.8B, which sat largely in line with the Street consensus, but outlined a significant drop from Q121 which came in at around $2.3B. EPS was recorded at $0.64, again dropping below expectations of $0.70 and underperforming against last year’s $0.79. Net bookings were also lower than last year, coming in at $1.5B, down from $2.1B.

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The company’s underperformance can be attested to lower numbers for their prized flagship franchise Call of Duty, as well as product cycle timing over at Blizzard. However, Investors shouldn’t be immediately repelled, the company’s next Call of Duty game is expected later this year, and the hype surrounding the latest edition has the potential to reignite the uninspiring interest in the franchise. Despite the potential promise on the horizon, Activision kept its cards close, failing to issue earnings expectations for Q2, but pointed to ‘renewed expansion’ in Q4. 

Another key factor that has weighed on growth is the looming acquisition from Microsoft. The company stated in its Q1 report that it has faced mounting legal and professional fees preliminary to the approaching sale. Microsoft is set to announce its Q3 earnings tomorrow, which might shine some more light on the acquisition. 

The forthcoming deal with Microsoft seems to be acting as a solid sentiment support for ATVI shares, which jumped around 25% following the news in January. Since then, shares have held support with consolidation around the $80 zone. 

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