Activision Blizzard, Inc. (NASDAQ: ATVI) shares have advanced more than 15% since the beginning of 2022 year, even though the company reported that the number of monthly active users (MAUs) continues to fall.
Microsoft’s acquisition of Activision remain in focus
Activision Blizzard reported worse than expected fourth-quarter results last month; total bookings have decreased 18.4% Y/Y to $2.49 billion, while the fourth quarter GAAP EPS was $1.25 (misses by $0.07).
In-game net bookings were $1.24 billion compared with $1.32 billion for the fourth quarter of 2020. Negative information is that the number of monthly active users (MAUs) fell to 371 million in the fourth quarter from 390 million in the third quarter.
Despite this, Activision Blizzard shares remain supported in the 2022 year, but the main reason for this is the fact that Microsoft announced that it is buying Activision for $68.7 billion.
This is one of the biggest moves Microsoft has ever made into the video game market, and this acquisition will make Microsoft the third-largest gaming company by revenue, behind Tencent and Sony.
The deal values Activision Blizzard at $95 a share and is expected to close in Microsoft’s fiscal year ending June 30, 2023.
The Federal Trade Commission has requested this week more information from both companies about their proposed deal whereby Microsoft acquires Activision.
Activision Blizzard has set a special meeting to vote on the deal for April 28, while CEO Bobby Kotick said that Microsoft has technologies and innovations that will support the next generation of games. CEO of Activision Blizzard, Bobby Kotick, added:
As we look to the future, with Microsoft’s scale and resources, we will be better equipped to grow existing franchises, launch new potential franchises, and unlock the rich library of games we have assembled over 40 years.
Activision Blizzard is a stable company with a good position in the market, but with a market capitalization of $61 billion, we can notice that this stock is not undervalued.
Activision Blizzard trades at more than fifteen times 2021 EBITDA, the book value per share is less than $25, and if the acquisition agreement failed to go through, the share price would probably be at lower levels.
$70 represents a support level
Activision Blizzard shares remain supported after Microsoft announced that it is buying Activision for $68.7 billion.
Data source: tradingview.com
The deal values Activision Blizzard at $95 a share, which implies more than a 15% upside compared with the current share price.
The acquisition deal is expected to close in Microsoft’s fiscal year ending June 30, 2023, but historically, a long list of M&A agreements failed to go through.
Summary
Activision Blizzard shares remain supported in 2022 year, but the main reason for this is the fact that Microsoft announced that it is buying Activision for $68.7 billion. The acquisition deal is expected to close in Microsoft’s fiscal year ending June 30, 2023, but historically, there is a long list of M&A agreements that failed to go through.
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