Activision Blizzard Share Price Forecast August 2021 – Time to Buy ATVI?

Shares of Santa Monica-based video game holding company Activision Blizzard (NYSE: ATVI) have increased by 0.06% to $83.62 as of July 30 (19:50 UTC-4). The company is facing the aftermath of a discrimination lawsuit filed against the company by the state of California.

Activision Blizzard – Technical Analysis

According to Activision Blizzard’s financial statement, the company has a market cap of $64.974 billion with total assets worth $23.425 billion. Activision Blizzard’s revenue for 2020 was $8.09 billion with a profit margin of 27.16%. Revenue for 2019 was at $6.45 billion. Total liabilities for the company are at $8.07 billion. The total operating expenses for 2020 is $5.56 billion, up from $5.26 billion in 2019 and $4.75 billion in 2018.

From the technical information, we see that oscillators such as Bull Bear Power(−8.67), Ultimate Oscillator (7, 14, 28)(34.94), Stochastic RSI Fast (3, 3, 14, 14)(9.06) and Awesome Oscillator(−5.92)  are pointing towards neutral. Moving averages such as Exponential Moving Average (100)(92.31), Simple Moving Average (100)(93.42), Exponential Moving Average (200)(89.45) and Simple Moving Average (200)(90.43) are pointing towards selling.

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Recent Developments

Activision Blizzard experienced a net margin increase of 27.2% in 2020 compared to 24.6% in 2018. This resulted in a 19% increase in net income for the company. Total earnings for the period grew by 17% to $2.85 in 2020, compared to $2.43 in 2018.  As a result of this and other factors related to the pandemic, the company’s P/E grew from 19x in 2018 to 33x in 2020.

Activision Blizzard grabbed the headlines last month after facing a discrimination lawsuit from the state of California. The company has experienced a $7.7 billion decline in market share since the lawsuit was announced. The company has been accused of equal pay violations, sex discrimination, and sexual harassment. Additional details in the lawsuit include allegations that the women staff of Activision Blizzard were facing sexual harassment, “including groping, comments, and advances.”

Some of the demands that employees in the walkout have made include new hiring and promotion processes to increase representation, a diversity, equity and inclusion task force to hire a third party to audit executive staff, publishing salary and promotion data for all employees and an end to forced arbitration clauses in employee contracts. This lawsuit has also affected the share price of its public video game peers such as Electronic Arts and Take-Two Interactive Software.

Additionally, the company’s COO Fran Townsend recently shared an article on Twitter that decried the practice of whistleblowing. He is also responsible for an email that was leaked to the public, where he labelled the workers at the Department of Fair Employment and Housing behind it “unaccountable State bureaucrats. The email dismisses all allegations against the company made by California. It suffices to say that all this media attention hasn’t done Activision Blizzard any good.

Should You Buy ATVI Shares?

Even though Activision Blizzard experienced a boost in adoption from the pandemic, there is still ample room for growth in the future. The number of gamers is projected to cross 3 billion people worldwide by 2023, which is an increase from 2.7 billion in 2020. This puts top-tier graphics on next-generation consoles in a very advantageous position.

Activision Blizzard looks like it is well-positioned to tackle the growing demand for immersive gameplay as evident from its plan to hire over 2000 developers in the coming year. However, investors should wait until further information on the development of the lawsuit before they think about picking these shares up.

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