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  • Writer's pictureIshfaaq Peerally

Activision Blizzard ATVI Stock Analysis


The main reason why I'm looking at Activision Blizzard $ATVI is because of the possibility of making money by arbitrage on the acquisition by Microsoft $MSFT . Microsoft is acquiring Activision in an all-cash transaction with a current spread of 20%.


Activision Blizzard is one of the largest video games publishers in the world operating under three main brands, Activision Publishing, Blizzard Entertainment, and King Digital Entertainment. Some of the most famous franchises owned by Activision Blizzard are Call of Duty, Crash Bandicoot, Guitar Hero, Tony Hawk's, Spyro, Skylanders, World of Warcraft, StarCraft, Diablo, Hearthstone, Heroes of the Storm, Overwatch, and Candy Crush Saga.


Activision Blizzard has been growing its revenues by 6% per year over the last 5 years with margins improving. The company has a great balance sheet and initially planned to buyback shares but because of this merger, this is not something they can do anymore.


Just looking at ATVI alone, it is overvalued according to me but because of this arbitrage opportunity, I think it can be a good investment. There is certainly risk that the deal doesn't go through but then, it might be cheap enough for further investments.



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