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Recently it looks like wall street is going bonkers. There is a hell of alot of fear and uncertainty in the air, as we currently have presidential candidates battling it out and driving fear into everyone's heart when comparing each others economic policies. Currently all stocks have dropped, this has mainly been driven by EA games gloomy outlook. However, this has largely been due too earnings of the previous quarter, and the worst of the recession hadn't really hit then. So, it seems that this is largely due too poor game performance on their behalf.
You can look up stock performance yourselves, although here is one article that seems too outline the general gist
http://seekingalpha.com/article/103475-why-i-bought-activision-after-electronic-arts-disappointed-the-street
Too add too this, the user base of WoW has grown too 11 million, and sales in Call of Duty and Guitar hero, one would expect profits yet again.
Too sum up: ALL video game stocks dropped after EA posted a LOSS.
Currently we haven't seen poor performance in ANY Blizzard stocks, and some huge sales in CoD and GH, but losses in others.
Why does this matter? When a president is chosen, the economy will obviously surge as economic certainty is re-solidified. And the big one: Activation Blizzard will report earnings on the 5th of November. Do the math; with 11 million WoW each paying $13-15 a month, do you think they will post a loss?
Call me an asshole for capitalizing on US election fears, along with economic fears. But the timing for all of this is going to be pretty damn awesome 
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[[Why does this matter? When a president is chosen, the economy will obviously surge as economic certainty is re-solidified. ]]
How would you know that?
Economy will either worsen/stagnant for 2009. Just because a new President is in office doesn't mean he will be capable to fix such a complex problem. The U.S economy won't depend on Obama or McCain but its going to depend on pretty much how the global leaders will react.
But if you're planning on keeping it beyond 2009, even 2010, then it should stabilize again (Warren Buffet invested a good chunk of his fortunes on the stocks again).
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I won't comment about where I think the valuation of ATVI - or any other stock - is headed. That said, I take a few general issues with your arguments:
1) I think it's highly dubious that the economy will surge with a new president next week. Maybe the stock market will - briefly - but the economy itself will be in trouble for some time yet. There is too much already set in motion right now - companies in hiring freezes, laying off workers, tightening their operating cash flow, and radically scaling back planned CapEx - for any quick cure driven by improvements to consumer sentiment. Once these things start happening - it creates a domino down the supply chain for almost every industry.
2) It's generally held in the past that gaming is counter-cyclical to macroeconomic conditions. When disposable income shrinks, people will stay at home and play games because they're an excellent value for entertainment - or so the logic goes right? This may not be true anymore. So much of the growth of gaming in the past few years has been driven by more casual consumers coming in, that we may see changes in how gaming responds to a bear market. There was an analyst the other day commenting on high initial game sales for titles coming out now, but a much steeper decline soon afterwards. This makes sense - the hardcore are unphased - and will snap up hot titles immediately - but the casual consumer may be scaling back.
3) Valuations are not based strictly on profits. You're right: ATVI will probably post robust profits, but today's share price already reflects the market's expectations about future earnings. What's going to matter is how they do vs. Wall Street's expectations of their earnings as well as their own earnings guidance.
4) ATVI has great games slated for Q4 (again this is already built into today's share price) - and I have no doubt they'll do well. They're also sitting on something like $4B of cash and cash is king in times like this. But even a company this strong can have their stock price dragged down by what's happening around them. Look at Nintendo - which has seen roughly half its market cap erased this year - despite performing phenomenally. When times are good - you can place a lot more weight in a single company's outlook as being indicative of their valuation. When times are bad - like now - you have investors considering whether they should be fucking in equity markets in the first place, because the value of cash is so high now (in terms of opportunity costs - not currency rates).
Again - I'm not making predictions either way - just general comments.
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On November 03 2008 15:46 ShcShc wrote:
[[Why does this matter? When a president is chosen, the economy will obviously surge as economic certainty is re-solidified. ]]
lol. You really think people are that confident in either candidate? The market moves independently from candidates. The belief that a candidate causes a positive or negative market is really infant through the spectacles of economics. President's NEVER fix the market. They can only make decisions that affect the long term abilities of businesses to succeed. The more socialist the US becomes, the more businesses are poised to fail without the government babysitting; but that is a long long time horizon.
Base your investment decisions on the economics behind it, not short-sighted emotions of people reacting based on fear. That's why the rich get richer when the majority leaves the market. Considering buying now is probably a smart choice because inflation is finally being chopped off the top and our market is being equalized. I personally think we have a little bit longer to fall before we can pick up the pieces.
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Id buy blizzard shares anyday if i had the money.
To me its simple math, each new game = profit
Blizzard might make decisions i dont like about theyr games, but they dont fail do deliver massive blockbuster profits ever since starcraft.
And i believe that when they release Wotlk they will make profit, when they release sc2 they will make profit, diablo 3, theyr secret mmo, etc...
you got the picture, Blizzard might have failed me when making wow endgame, but they sure as hell dont fail when doing games that generate reliable revenue.
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I've been monitoring ATVI (Activision Blizzard) for a few months and they've been doing absolutely horrid. The initial merger of Activision Blizzard brought it up from 26.00ish a share to the highest 36.00 or so per share. Even before the market fucked up the stock was doing horrible. It dropped lower than 10 a share but now its about 12.5 a share.
I mean, yeah, now would be the absolute opportune moment to buy stock. But how long will it take before wall street is on the up and up and not the up and down. I'd say wait it out a few months and buy stock in Digital TV (since cable is going to be no more due to the nation wide upgrade). Once the day is official (I think its within 3 months or so), I'm sure stocks in that will soar like a mother.
ATVI (Activision Blizzard) - Stock Quote
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I put ATVI in my mock portfolio in anticipation for WOTLK. Not that I know anything about stocks.
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On November 03 2008 15:59 D10 wrote:
Id buy blizzard shares anyday if i had the money.
To me its simple math, each new game = profit
Blizzard might make decisions i dont like about theyr games, but they dont fail do deliver massive blockbuster profits ever since starcraft.
On a side note (not to pick on you, D10) - this post is a great example of what is called "institutional bias" in share valuation - essentially upside based on a company's "sex appeal". Generally, you can expect to attribute a small portion of the valuation of firms like AAPL / ATVI to this.
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lol don't do it. buying a stock because you like one product they make is a terrible idea.
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On November 03 2008 15:59 NastyMarine wrote:I've been monitoring ATVI (Activision Blizzard) for a few months and they've been doing absolutely horrid. The initial merger of Activision Blizzard brought it up from 26.00ish a share to the highest 36.00 or so per share. Even before the market fucked up the stock was doing horrible. It dropped lower than 10 a share but now its about 12.5 a share. I mean, yeah, now would be the absolute opportune moment to buy stock. But how long will it take before wall street is on the up and up and not the up and down. I'd say wait it out a few months and buy stock in Digital TV (since cable is going to be no more due to the nation wide upgrade). Once the day is official (I think its within 3 months or so), I'm sure stocks in that will soar like a mother. ATVI (Activision Blizzard) - Stock Quote
Why are you comparing prices before the 2 for 1 share split to prices after it?
It's 17.99 highest if you take that into account and the difference isn't that huge as you make it out to be.
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I really don't have any solid evidence to support this, because I'm too lazy to go find it, but I was always under the understanding that the market generally has a mild surge when elections take place - especially those that remove an unliked president. I was always led to believe that it was just because 'change' (especially after 8 years and an unliked president) generally brought about a mild boost in the economy. (Most specifically the housing market.)
I always was under the impression that the status of the market was highly susceptible to change based on 'hype' and human psychology.
But like I said, I really don't know how true that is, that's just what I assumed. So please don't act like I'm being certain if you choose to attack my statements!
As for that stock in particular, I have no fucking clue. =P
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On November 03 2008 16:25 lololol wrote:Show nested quote +On November 03 2008 15:59 NastyMarine wrote:I've been monitoring ATVI (Activision Blizzard) for a few months and they've been doing absolutely horrid. The initial merger of Activision Blizzard brought it up from 26.00ish a share to the highest 36.00 or so per share. Even before the market fucked up the stock was doing horrible. It dropped lower than 10 a share but now its about 12.5 a share. I mean, yeah, now would be the absolute opportune moment to buy stock. But how long will it take before wall street is on the up and up and not the up and down. I'd say wait it out a few months and buy stock in Digital TV (since cable is going to be no more due to the nation wide upgrade). Once the day is official (I think its within 3 months or so), I'm sure stocks in that will soar like a mother. ATVI (Activision Blizzard) - Stock Quote Why are you comparing prices before the 2 for 1 share split to prices after it? It's 17.99 highest if you take that into account and the difference isn't that huge as you make it out to be.
not really considering it doubled in difference.
Original - 26 ish
A few weeks after the merger - 36 (peaked at about 36 but was never consistent over 30)
Now: 12.5 (Dropped to 16 a share before the stock market went crazy)
Not a big difference? And not to mention that it peaked b.c of the merger and dropped significantly not even a month or so later. Might I add it never was consistent over 30 per share (if I remember correctly, the stock never clocked in at 28, 29, 31, 32). It really just jumped around a bit and then took massive swings. Trust me. Its not like Im pulling this out of my ass
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You still are comparing a price before the share split to a price after it.
2 shares at $13 = 1 share at $26(original price)
2 shares at $12.5 = 1 share at $25(now)
A BIG DIFFERENCE?
Even in the chart you posted they take into account the share split and the price is nowhere near 26, because of that.
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On November 03 2008 16:22 nvnplatypus wrote:Show nested quote +On November 03 2008 15:59 D10 wrote:
Id buy blizzard shares anyday if i had the money.
To me its simple math, each new game = profit
Blizzard might make decisions i dont like about theyr games, but they dont fail do deliver massive blockbuster profits ever since starcraft.
On a side note (not to pick on you, D10) - this post is a great example of what is called "institutional bias" in share valuation - essentially upside based on a company's "sex appeal". Generally, you can expect to attribute a small portion of the valuation of firms like AAPL / ATVI to this.
Also, current stock prices don't reflect blizzard's profit. They reflect the potential they see in blizzard. The current share prices already take into account WoW profits and profits that are expected in the future.
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On November 03 2008 16:22 nvnplatypus wrote:Show nested quote +On November 03 2008 15:59 D10 wrote:
Id buy blizzard shares anyday if i had the money.
To me its simple math, each new game = profit
Blizzard might make decisions i dont like about theyr games, but they dont fail do deliver massive blockbuster profits ever since starcraft.
On a side note (not to pick on you, D10) - this post is a great example of what is called "institutional bias" in share valuation - essentially upside based on a company's "sex appeal". Generally, you can expect to attribute a small portion of the valuation of firms like AAPL / ATVI to this.
So what you are saying is that its bad to invest in business that you like ?
Should I go and look for the ones with the highest capacity to grow so i can then sell it and do it all over again ?
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Buy? I'll give it a strong NO.
One of the cost people will eventually cut is WOW. WOW is so huge for ATVI. The article mention progaming, but that's a long way off after Starcraft 2 release. It also mention Blizzard games on consoles, but Blizzard has no prescence on consoles at all. It mention EA may end up being bought up, but I highly doubt that will ever happen. EA is just too big.
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On November 03 2008 16:46 D10 wrote:Show nested quote +On November 03 2008 16:22 nvnplatypus wrote:On November 03 2008 15:59 D10 wrote:
Id buy blizzard shares anyday if i had the money.
To me its simple math, each new game = profit
Blizzard might make decisions i dont like about theyr games, but they dont fail do deliver massive blockbuster profits ever since starcraft.
On a side note (not to pick on you, D10) - this post is a great example of what is called "institutional bias" in share valuation - essentially upside based on a company's "sex appeal". Generally, you can expect to attribute a small portion of the valuation of firms like AAPL / ATVI to this. So what you are saying is that its bad to invest in business that you like ? Should I go and look for the ones with the highest capacity to grow so i can then sell it and do it all over again ?
I'm not making any recommendation for or against ATVI or any other stock. And even on a more general level - no, that is not what I'm saying.
As noted in my first post and reiterated by someone else - today's share price of any given stock incorporates the market's future outlook on earnings. What I am saying - is that for ATVI and AAPL and some others - on a risk-adjusted basis - there is some amount of upside on valuation from institutional bias. That can be a good or a bad thing - but is something to note when an investor is making their own judgment about the future valuation of a company they're about to invest in.
The reason I quoted your post is because it is looking at ATVI very much from a gamer's perspective.
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United States996 Posts
sc2, despite being the biggest moment of our lives, will not really make the value of the stock move much either way as it is a relatively small afair imo
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Well, at least i expect Blizz next mmos to really increase it, and you know its going to come, its a matter of when =p
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On November 03 2008 16:40 lololol wrote:
You still are comparing a price before the share split to a price after it.
2 shares at $13 = 1 share at $26(original price)
2 shares at $12.5 = 1 share at $25(now)
A BIG DIFFERENCE?
Even in the chart you posted they take into account the share split and the price is nowhere near 26, because of that.
Where are you getting two shares from??? Am I missing something here?
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Yeah, but i'm saying one of the main reasons ALL game/entertainment stocks went down so heavily is EA posted a net loss of $310 million and fired 600 people. EA was seen as a market indicator, and their comments reflected heavily on other stocks. However on the 5th they will probably post earnings, and without cutting jobs. So, I would expect a correction for the loss they made (and more) as a result of the EA statement. So, their share price has been dragged down by both the economy AND EA games. Lol it's more of a 'short term' gain to capitalize on negative sentiment.
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On November 03 2008 17:41 NastyMarine wrote:Show nested quote +On November 03 2008 16:40 lololol wrote:
You still are comparing a price before the share split to a price after it.
2 shares at $13 = 1 share at $26(original price)
2 shares at $12.5 = 1 share at $25(now)
A BIG DIFFERENCE?
Even in the chart you posted they take into account the share split and the price is nowhere near 26, because of that. Where are you getting two shares from??? Am I missing something here?
Yes, they split 1:2 on Sept. 8. On 5-Sept they closed at $34.10, and on Sept. 8 at $16.79. Adjusted for split, that particular day was a move from 16.87 to 16.79.
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Physician
United States4146 Posts
it is a strong buy (right now) ~
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On November 03 2008 15:46 ShcShc wrote:
[[Why does this matter? When a president is chosen, the economy will obviously surge as economic certainty is re-solidified. ]]
How would you know that?
Economy will either worsen/stagnant for 2009. Just because a new President is in office doesn't mean he will be capable to fix such a complex problem. The U.S economy won't depend on Obama or McCain but its going to depend on pretty much how the global leaders will react.
But if you're planning on keeping it beyond 2009, even 2010, then it should stabilize again (Warren Buffet invested a good chunk of his fortunes on the stocks again).
The economic traditionally gets a shot in the arm after an election, even if it's temporary.
My friend was thinking about investing in Activision too cuz of what you said. Personally, I think if shit really hits the fan, people aren't gonna be spending money on games, haha
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Activision has been steadily growing for years, it's not like this is a surprise.
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EPT
