Shares of Activision Blizzard (NASDAQ:ATVI) declined 10% in May, according to data from S&P Global Market Intelligence, after the video game publisher announced underwhelming first-quarter 2019 results.
Activision stock plunged nearly 5% on May 3, 2019 alone, the first trading day after the company revealed its quarterly sales fell 7.1% to $1.83 billion, translating to roughly flat adjusted net income of $603 million, or $0.78 per diluted share. To be fair, both the top and bottom lines were well above Activision's own guidance, which called for adjusted earnings of $0.63 per share on revenue of $1.715 billion.
It likely didn't help that the broader markets fell hard last month on macroeconomic uncertainties and trade war concerns, leaving the S&P 500 down nearly 7%.
But if you're wondering why Activision shares immediately dropped on those technically better-than-expected results, look no further than the company's user bases. While monthly active users (MAUs) at the King mobile-gaming segment climbed by 4 million sequentially to 272 million, MAUs at the more lucrative Activision segment declined to 41 million from 53 million, and Blizzard MAUs dropped to 32 million from 35 million.
Activision Blizzard CEO Bobby Kotick credited the company's earnings beat to its "strong operating discipline" and pledged to bolster investments in its largest gaming franchises -- including the likes of Call of Duty, Overwatch, Sekiro: Shadows Die Twice, and Candy Crush -- to drive future growth.
For the second quarter, Activision Blizzard expects revenue of $1.315 billion and adjusted earnings of $0.35 per share. As such, Activision reiterated its outlook for full-year revenue of $6.025 billion and adjusted earnings of $1.85 per share.
However, that affirmation wasn't enough to keep Activision stock from modestly lagging the broader market last month. If the company wants to change that trend for the better and resume creating value for shareholders, it will need to show more tangible progress toward recapturing sustained, profitable growth in revenue, earnings, and MAUs.