Activision Blizzard earnings preview: Here's what to expect
Activision Blizzard (ATVI) is set to report its Q4 earnings today after the bell.
Here's what Wall Street's expecting to see out of the video-game giant, as compiled by Bloomberg:
Q4 net bookings: $3.08 billion expected
Q4 adjusted earnings per share (EPS): $1.52 expected
Q4 monthly active users: 388.4 million expected
The expectations are high for Activision coming into this earnings cycle – the company's coming off a series of high-profile releases including, "Call of Duty: Modern Warfare II," "Overwatch 2," and "World of Warcraft: Dragonflight."
However, it's a tense time for Activision, as the Santa Monica–based company is being sold to Microsoft (MSFT) for a whopping $69 billion – but the deal hasn't yet gotten regulatory approval. The Federal Trade Commission (FTC) sued to block the deal back in December, and it's a case that's very much still in process. Additionally, Activision recently was forced to pay $35 million after a Securities & Exchange Commission (SEC) investigation found that the company had violated whistleblower protections and facilitated workplace misconduct.
'Legal and reputational risk'
CFRA analyst John Freeman currently has a Hold on Activision stock, citing concerns about the company's reputation and fears that Microsoft could viably axe the deal.
"Our Hold represents a balance between what we see as a company facing organizational turmoil due to the California lawsuit alleging a pervasive culture of sexual harassment, and, on the other hand, Microsoft’s $95/share offer that faces considerable regulatory scrutiny," Freeman wrote on Jan. 28.
In December, California's Civil Rights Department sued Activision, alleging a culture of persistent sexual harassment and pay discrimination at the company. The company settled a similar lawsuit for $18 million filed by the Equal Employment Opportunity Commission in 2021.
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SHANGHAI, CHINA - AUGUST 2, 2019 - (FILE) The booth of Blizzard Entertainment at Chinajoy Expo in Shanghai, China, Aug. 2, 2019. On November 17, 2022, Activision Blizzard Entertainment announced that the current licensing agreement with NetEase will not be renewed upon its expiration on January 23, 2023, and that it will suspend most of its Blizzard game services in mainland China. (Photo credit should read CFOTO/Future Publishing via Getty Images)
To Freeman, it's notable that there's a real risk that Microsoft walks away, leaving Activision and its increasingly shaky reputation on its own.
"With a break-up fee of only $3B (vs. MSFT’s $105B in cash), the MSFT deal may very well fall through, either blocked outright by the FTC or abandoned if MSFT deems the concessions it must make to complete the deal to be intolerable," Freeman continued. "ATVI also faces legal and reputational risk stemming from the California lawsuit."
Over the last 12 months, Activision shares are down about 9%.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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