Why Activision Blizzard (ATVI) Stock Is Falling Today

NEW YORK (TheStreet) -- Activision Blizzard (ATVI) shares are down -1.3% to $20.60 after French media company Vivendi  (VIV) announced that it was decreasing its investment in the video game maker and selling half of its shares.

The company will sell 41.5 million shares of Activision Blizzard, equivalent to 5.8% of the company's shares, worth approximately $860 million. Vivendi was at one time the principal shareholder of the Activision.

The sale continues Vivendi's effort to free up cash as the company looks to restructure and focus on its music and media properties.

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TheStreet Ratings team rates ACTIVISION BLIZZARD INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ACTIVISION BLIZZARD INC (ATVI) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, attractive valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, ATVI's share price has jumped by 34.76%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ATVI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for ACTIVISION BLIZZARD INC is currently very high, coming in at 76.33%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.37% is above that of the industry average.
  • ATVI's debt-to-equity ratio of 0.62 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that ATVI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.38 is high and demonstrates strong liquidity.
  • ACTIVISION BLIZZARD INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ACTIVISION BLIZZARD INC reported lower earnings of $0.95 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $0.95).
  • You can view the full analysis from the report here: ATVI Ratings Report
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