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Activision Blizzard earnings preview

Yahoo Finance’s Dan Howley joins the Yahoo Finance Live panel to preview Activision Blizzard’s upcoming earnings.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance. I want to spotlight the sell-off we're seeing here today with all three major indices in the red. The NASDAQ has been the leader to the downside all day, now off more than 2 and 1/2%. Tech stocks taking it on the chin. When you look at the S&P 500, by far the worst performing sector, off more than 2 and 1/2%. Apple seeing about a 4% decline, along with Autodesk and PayPal off by about 4 and 1/2%. We'll keep you updated on that sell-off as it continues.

And stepping back into the earnings front, I want to check in on one stock that has benefited from more people staying at home. That is, of course, Activision Blizzard. The gamemaker is set to report earnings after the bell. The stock's up by about 50% since the pandemic began. And for more on what we should be expecting, I want to bring on Yahoo Finance's tech editor Dan Howley, who has the latest for us. Dan.

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DAN HOWLEY: That's right, Zack. Yeah, we've talked a lot about how video games and video game makers have done exceedingly well as a result of the pandemic, people having to stay home. But now, people are starting to be able to go out and about again. We heard that New York City is going to be opening up to full capacity again. Obviously, we have other states across the country and cities that are doing the same. So what does that mean for gaming? Well, according to some of the folks that I've been speaking to, they don't see the gaming trend slowing down at all.

Now just to give you some numbers for Activision Blizzard, we're expecting to see $1.8 billion in revenue this quarter. That would be a 17% year over year increase in revenue. And just to break that down a little bit and give you an idea of where that money is mostly coming from, they, of course, have their Activision brand, their Blizzard bland-- brand, excuse me-- and then their King brand.

Now, King is really where you get "Candy Crush," those kind of mobile games. Activision is where you have the "Call of Duty." And Blizzard is where you have things like "World of Warcraft" and "Diablo." Now, "Call of Duty," done incredibly well the past couple of quarters. It launched last March their War Zone offering. And then they had a newer update called "Call of Duty, Cold War."

They have continued to do well. The War Zone is a free download, but like "Fortnite," you can purchase in-game skins. And that's basically just an excuse to print money now for Activision Blizzard. We're expecting from them $114 million. That should be for the quarter as far as revenue. And then we are expecting from King, actually, $259 million. And really, Blizzard down at 32.

But I think it's important to point out how important King is to Activision Blizzard. Their mobile brand continued to do well throughout the pandemic, despite the fact that people were in their homes. You would expect them to maybe not have their phones as close to them as they would perhaps commuting. But that's not the case. They continue to see that doing well. "World of Warcraft" has done well for them as well. And then, obviously, that "Call of Duty" aspect really just blowing up.

But everybody that I seem to be talking to doesn't think that gaming is going to slow down. They seem to think that this is a pull forward, where more and more people were exposed to gaming, and they'll continue to do so. I just spoke to Logitech CEO. They said they're continuing to see people purchasing all of those game accessories. And that will be the trend into the future.

EMILY MCCORMICK: All right, once again, those Activision Blizzard earnings on deck for after market close today. Yahoo Finance tech editor Dan Howley, thanks for breaking that down for us.