Buy Activision Blizzard for eSports exposure, this portfolio manager says

Gaming company Activision Blizzard (Activision Blizzard Stock Quote, Chart, News NASDAQ:ATVI) has merited “Top Pick” status from Kim Bolton, portfolio manager and founder at Black Swan Dexteritas, who says ATV’s Overwatch eSports league is shaping up to be a great asset.

In March, Activision Blizzard’s share price hit a record high of $79.63, with the stock now up 21.2 per cent for 2018 (all figures in US dollars). In May, ATV reported first quarter earnings per share of $0.65, up from a Q1/17 EPS of $0.56, on revenues of $1.97 billion. Management highlighted the company’s ability to make money even during quarters not featuring major content releases.

Bolton says the success of Activision Blizzard going forward will in part be tied to its Overwatch eSports league…

“Our continued ability to set new records speaks to the quality of our teams and the breadth and enduring nature of our portfolio of franchises against the backdrop of a large and growing interactive market,” said CEO Bobby Kotick. “As we look ahead, our innovative core gaming pipeline, as well as initiatives like mobile, eSports, and advertising, will continue to drive growth for our business.”

Bolton says the success of Activision Blizzard going forward will in part be tied to its Overwatch eSports league, which launched its first regular season of play in January and is currently in its playoff rounds.

“A catalyst for [Activision Blizzard] is all about mobile deployment, eSports, streaming, geographical distribution,” says Bolton to BNN Bloomberg. “They have 30 per cent of their revenue coming from mobile, they have Call of Duty and World of Warcraft, they came out with this new thing called the Overwatch League, where people watch teams play.”

“This league, Robert Kraft, the owner of the New England Patriots, actually bought a team on this. So, it has a great runway,” says Bolton.

So far, ATV has sold 12 teams for Overwatch, netting almost a quarter of a billion dollars, and has plans to grow the league to 28 teams. Along with Overwatch, ATV runs a Call of Duty World League, which has seen its cumulative hours watched double year-over-year.

ATV’s share price suffered a major pullback in March of this year but has since made up almost all of those losses, opening trading on Tuesday at $77.00.