we're gonna bring in our next guest, john Freeman
, who is the C. F. R.
A. Research joining us from CFR Research, john
great to have you here with us today. What
were your biggest takeaways from this report? Absolutely.
What were your biggest takeaways from this report? And
we're also seeing Activision stock fall more than 12% in
premarket trading here. Yeah, so a lot of
interesting sort of mix of things here, um the
results itself for for the quarter, we're actually quite
strong, especially on the bottom line, I mean
they beat by 19 cents I think even beat my
, you know, sort of elevated as I think
I was a little bit above consensus. Um And
the revenue growth was was relatively strong. Um 7%
doesn't sound like it, but uh the, you
know, the third quarter of 2020 was a really
tough compare because uh that was that was what the
pandemic, everybody locked down and you know, that
sort of surge revenue I think grew 46%. So
it was a tough compare. So 7% growth is
actually pretty impressive. Now, the problem of course
, was the delay in, well there's two problems
. The first one is the delay in Overwatch and
uh subsequent editions of Overwatch and Diablo, which are
, you know, so those two games got pushed
out almost a whole year and that's a that's pretty
serious, but I can understand that because they are
developing for the new platform, the new console?
Um you know, those uh in order to really
optimize the code to take advantage. Full advantage of
the of the new architecture of the new consoles,
the Xbox five and um, uh, xbox series
X and the and a Playstation five, you know
, that that those, those were complete redesigns that
, you know, I had a lot of hardware
treats not just faster chips so, you know,
too, that I can understand the delay in that
. And, and, and they, you know
, they say they want to be able to,
you know, when they released that they want to
be fully, you know, impressive and all of
that stuff. Okay. I can understand that,
but the one that bothers me of course is the
is the sexual harassment suit the culture problem. And
that that's more, that's more problematic because uh,
for a number of reasons obviously culture is very important
for uh, for for any company. But for
video game companies, it's, you know, it's
it's um, it's part of their their their their
also their appeal that a culture of the of the
of the of the of the video game company is
part of the appeal to the gamers, you know
, it's it's all tied up in the brand.
So if those two things are connected by the way
, if that delay was related to the fact that
they fired 20 people. Yeah, that's that's that's
getting a little scary to me, but under 70
starting to look good and, and john I guess
, you know, on the topic of the sexual
harassment and the, the corporate culture rather, you
know, have you, as you've been tracking Activision
blizzard scene material impact to the company, either in
their financials or either in how the shareholders, which
I imagine some of the gaming community, if they
truly believe in some of the titles, the manufacturers
and the developers of the games that they play,
they may also be shareholders, um, in some
of these companies to, yeah, no, exactly
. That's the whole, that's exactly right. So
I haven't, so I, yeah, I want
to, I want to talk to some sources over
the next couple of weeks to see if there's that
correlation. Um, the, you know, find
out exactly, you know, the 20 people who
got, who fired, you know, where they're
key people in either Diablo or Overwatch, for example
. Um, but in Activision's, you know,
defense lately. You know, speaking of, uh
, the, the, it's a very diverse company
that is, you know, is, is come
together through a lot of acquisitions. So there's a
lot of different studios with mixed cultures. Now.
It's on them, it's on coding, coding to
, you know, Um, you know, have
a unified culture and obviously have absolutely no tolerance for
any of that kind of behavior. Um, I
would say, particularly younger, you know, younger
people, but older people too, you know,
it's just not acceptable anymore. And it does,
it does affect the brand. And so I think
, you know, I want to see that that
if there is that correlation, but then again,
you know just taking that putting the hat on of
, you know just you're looking at the stock if
that thing goes under 70, it starts to get
pretty interesting because remember They've got$64 billion dollars in
net cash, which is you know, 60 billion
market cap, but I think you're right about now
and just more than 10% of market cap, I
just want to jump in. And certainly so we're
seeing pre market shares actually under seventies sitting at about
$68.30 right now. Are there any gaming stocks that
you would be bullish on right now roadblocks? I
really like robots. Um And the reason is it
has two aspects to it that although the other E
A. And and and activation takes, you are
trying to build communities with various games roadblocks has it
throughout all. You know is sort of built in
, they have a social a social media aspect to
that uh to their to their platform and it's a
platform that is, you know, the kids and
and now you know kids in their twenties and thirties
and forties are building games as part of the game
, right? And so that's um and you know
it helps you learn how to code and all of
these kinds of things that's a that's very powerful.
Those three things everybody like video games and then you
know you have a video game development platform and then
the social media aspect to it, I think that
makes it, that gives them a sort of a
stickier competitive advantage going forward. Obviously they've got to
, you know, they've got operational things to take
care of. But Yeah, I like roadblock.
I imagine you're referring to the, the three day
outage that we had seen there. But yeah,
keeping tabs of shares of roadblocks, they are up
over the past month by about 2, 3%.
We'll keep a close eye on shares of both of
these companies. Activision Blizzard Down Big Premarket john Freeman
of CFR Research joining us this morning. Thanks for
the breakdown, john, appreciate it.