What Upside Does Activision Stock Have Today?

Activision (NASDAQ:ATVI) is having trouble breaking out of a $42 - $46 trading range. Valuations are compelling at around 21 times earnings but the company does not have any compelling game title offerings for consumers to accelerate sales. With no big gains ahead for shareholders, why consider Activision stock?

Activision may launch Diablo IV in the next year. With a strong fan base, sales of the game title would send ATVI stock higher. Conversely, its Call of Duty series is not resonating as well with gamers as the company would like. Already, Activision cut 800 staff, or 8% of its workforce, due to weak 2018 results. The falling FTE could put a sting on game quality and gameplay, further hurting sales.

The WoW Classic (World of Warcraft) release could reverse weakening sales when the company releases this game this summer. And Call of Duty: Modern Warfare, getting an October 25 launch, is a potential positive catalyst. Investors should look for early reviews and commentary to gauge consumer interest with these well-known names.

Price Target
Activision is a long way away from its yearly high and trades at a fair value. The stock could break out above $50 if NPV reports improving the game title and console sales. For now, expect sales falling due to consumer fatigue for games and sensitivity to high prices.