by Ian Harvey
February 10, 2021
Activision Blizzard reported earnings on Thursday February 05, 2021 and delivered better-than-expected results.
Meanwhile, Weekly Options Traders have seen their trade, that they executed the day before, jump to 392% potential profits.
The stock continues to perform well, and there is likely to be further profits to be made before the expiration of the options trade.
The coronavirus pandemic has been a boon for the video gaming industry, and this trend is likely to continue.
According to a report from The NPD Group, total consumer spending on video gaming in the United States continues to soar, rising 26% year over year to $18.6 billion in the fourth quarter of 2020.
And Activision has been riding the trend, which is quite noticeable when the company reported fourth-quarter 2020 earnings results on Feb 4, and delivered better-than-expected results.
ATVI has returned around 9.6% since the earnings release.
Activision Blizzard Earnings Report…..
The company reported fourth-quarter 2020 non-GAAP earnings of 76 cents per share, up 22.6% year over year. Consolidated revenues rose 21.5% year over year to $2.41 billion. Adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues climbed 11.5% to $2.81 billion. The Consensus Estimate for earnings and revenues was set at $1.18 per share and $3.05 billion, respectively.
However, Activision Blizzard witnessed a year-over-year drop in Monthly Active Users (MAUs) during the quarter ended Dec 31, 2020. Overall MAUs came in at 397 million in comparison with 409 million as of Dec 31, 2019.
As well, the company’s net bookings rose 12.7% year over year to $3.05 billion. Net bookings from digital channels came in at $2.34 billion, up 24.5% year over year. Also, in-game net bookings were $1.32 billion, up 22% year over year.
The Catalysts Behind The Trade…..Read the full recommendation HERE…..
Activision Blizzard is set to
report fourth-quarter 2020 results on Feb 4.
For the to-be-reported quarter, the company expects non-GAAP revenues of $2 billion and earnings of 63 cents per share.
The Consensus Estimate for revenues is $2.82 billion, indicating an increase of 4.3% from the year-ago quarter’s reported figure.
Also, the consensus mark for fourth-quarter earnings has stayed at $1.18 per share in the past 30 days. The projected figure suggests a decline of 4.1% from the year-ago quarter’s reported figure.
Over the last four quarters, the company has beaten consensus EPS estimates four times.....continues.....
2. Analysts Thoughts.....
In a note for investment firm Raymond James, Andrew Marok writes, “Major publishers are likely to benefit in an outsized fashion from the shifts in the industry landscape… we see continued growth driven by both expansion of the gaming audience, and gaming taking increased time share among forms of entertainment.”
Specifically, Marok notes two important points that he sees as permanent changes in the gaming ecosphere: first, that "pandemic-accelerated shifts in time spent [are] likely to persist" and second, that "Cloud gaming [is] likely a longer-term benefit to gaming access." .....continues.....
3. Options Trading.....
Options traders have been fiercely bullish. Activision Blizzard stock's 50-day call/put volume ratio of 5.78 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than all other readings from the past year.
The Actual Recommended Trade.....
** OPTION TRADE: Buy ATVI FEB 12 2021 95.000 CALLS at approximately $2.35.(bought for 1.85)
The Profit Explained…..
“Weekly Options Members” entered an Activision Blizzard earnings trade on Wednesday, February 03, 2021 for approximately $1.85.
After the report the options trade hit a high of $9.10 (Potential profit of 392%).
Excellent profit within a 24 hour period!
However, any members still holding the trade there is still a chance that this profit could be exceeded as the trade hit $8.64 yesterday.
For first-quarter 2021, Activision Blizzard expects non-GAAP revenues of $2 billion and earnings of 59 cents per share. Net bookings are expected at $1.75 billion. Going on, for 2021, Activision Blizzard projects non-GAAP revenues of $8.23 billion and earnings of $3.34 per share. Net bookings are expected to be $8.45 billion.
"In a year filled with adversity, our extraordinary employees were determined to provide connection and joy to our 400 million players around the world," said CEO Bobby Kotick in a press release. "They accomplished this as well as generating record financial results for our shareholders."
Analysts See Further Upside.....
Raymond James analyst Andrew Marok maintains an Outperform rating on Activision Blizzard's stock with a price target lifted from $109 to $120.
Needham analyst Laura Martin maintains a Buy rating on Activision Blizzard's stock with an unchanged $102 price target.
Morgan Stanley analyst Brian Nowak maintains an Overweight rating on Activision Blizzard's stock with a price target from $108 to $115.
KeyBanc Capital Markets analyst Tyler Parker maintains an Overweight rating on Activision Blizzard's stock with a price target lifted from $102 to $120.
Will Activision Blizzard Earnings Continue to Rise?
Will We Recommend Another Future Activision Blizzard Earnings Trade?
Is There Still An Opportunity To Enter The Trade and Profit?
What Other Trades Are We Anticipating?
Do You Wish To Be Part Of This Action?
Join us here at Stock Options Made Easy, and find out our trades moving forward.
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!