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Activision's Biggest Launch Yet May Revive Its Ailing Stock

Kriti Gupta
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Activision's Biggest Launch Yet May Revive Its Ailing Stock

Activision's Biggest Launch Yet May Revive Its Ailing Stock

(Bloomberg) -- Shortly after midnight in New York, gamers will get their hands on Call of Duty: Black Ops IV, Activision Blizzard Inc.’s latest title featuring the new multiplayer Blackout mode. Investors will be watching the game developer’s stock on Friday, which at least one analyst says is not pricing in the launch.

“Investors are underestimating the impact Blackout mode will have on this game,” Jefferies analyst Timothy O’Shea said in a phone interview. He remains bullish on the stock and sees its recent sell-off as an opportunity to buy shares. Activision defied the market slump on Thursday, rebounding from a 12 percent skid over the past six trading sessions.

Jefferies expects opening weekend sales to reach 10 million units, with the potential for an additional 5 million. That compares with last year’s estimates for the WW2 release, which were closer to 7 million. With more than 600,000 concurrent viewers on Twitch expected, Blackout mode will also present in-game monetization opportunities for Activision and additional revenue into the fourth quarter, O’Shea said.

“We expect Blackout to see the most engagement of all Call of Duty modes this cycle. Longer term, we expect Blackout to become its own live service, potentially carved out with its own unique development team supporting it,” Keybanc analyst Evan Wingren said in a research note from Oct. 9. He rates the company overweight.

As Activision looks forward to the revenue its latest release and the upcoming holiday season will bring, the mobile gaming market presents both a threat and an opportunity. The company has already partnered with Tencent Holdings Ltd to bring a mobile version of Call of Duty to China. “There is no reason why they can’t build a billion dollar mobile business,” O’Shea said.

To contact the reporter on this story: Kriti Gupta in New York at kgupta129@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Brad Olesen, Catherine Larkin

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