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ATVI
Re ATVI, the recent weakness relative to EA has been
disappointing. As I've mentioned, I was selling covered calls at
$40. I think 2015 earnings will be strong thanks to better than
expected BLOPS3 sales. They also introduced MT to BLOPS3 a few
weeks after launch which will generate more free profit. Perhaps
the concern is 2016 guidance? What's going on with Destiny? Is
Candy Crush growing? There will be growth, they already said 30%
earnings accretion from Candy. Recent rumors suggest Destiny 2 may
not come out this year, and there's been no official timeline of
new content for the game. The player base is definitely down
significantly from a year ago, perhaps down by 75% based on
Bungie's own published player stats, and now with little or new
content coming in 2016 it leaves the door open for something like
Ubi's Division.
For 2016 guidance then, that one I can't answer. It comes down
to trusting in Kotick. Blizzard's Overwatch is coming soon and
presumably it will be a license to print money. If Kotick can
deliver on guidance, it's worth $40 imo.
forbes.com/si...ayers/
kotaku.com/th...495561
forbes.com/si...ungie/
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The thing with Kotick, if he thinks they will make $1.70+ in
2016, he will give guidance of $1.45 which is less than current
consensus (my numbers are only to make the point and not to be
considered accurate). If they beat Q4 and 2015 year (which I
expect), but then give lower guidance, the stock takes a hit. I
think that would be the time to buy simply because we know they are
likely to beat. Cuurently at $35 and consensus of ~1.60 for 2016,
that is a PE of 22 which is inline with EA currently. A bit pricey
in this market maybe? Or at least reasonably priced?
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Author:
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breinejm
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Subject:
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Off Topic
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Sentiment:
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Neutral
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Date:
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01/26/16 at 9:02 AM CST
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Jamok, you're up early! Those Yahoo Finance ests make no sense
to me. They say 2016 vs 2015 is $1.58 vs $1.36, and $5.05BN vs
$4.70BN. ATVI said in November King would be accretive to
non-GAAP revenue and eps by approx 30%, and those Yahoo Finance
numbers aren't 30% higher. King's revenue alone is multiple times
that $350M difference. It's almost like many of those Yahoo Finance
estimates haven't been updated since the acquisition.
ATVI's last guidance was $1.31 so 30% accretion should add 39c.
That alone takes it to $1.70, assuming no earnings growth in the
rest of the company. My theses from back then was if you assume
some growth for 2016 (now somewhat in doubt due to Destiny...) plus
the King earnings, that would put 2016 earnings near $2. As you
correctly note however, Kotick has a history of low-balling. I
doubt he would low-ball more than 2015 guidance plus 30%
though.
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Author:
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Jester
Debunker
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Subject:
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Off Topic
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Sentiment:
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Neutral
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Date:
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01/26/16 at 9:15 AM CST
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