Activision Blizzard (NASDAQ:ATVI) has delivered strong returns for investors over the past ten years. Looking ahead, the company is positioning for the next leg of growth in the mobile-game market, and it's off to a good start. Call of Duty: Mobile was downloaded 150 million times in the fourth quarter.

But can the stock make you a millionaire? We'll review where the company has been to get an idea of what investors can reasonably expect going forward.

A graphic of Activision Blizzard's in-game characters with the BlizzCon logo displayed at the bottom.

Image source: Activision Blizzard.

A review of past returns

Investors should not expect future performance to be significantly better than what the company has delivered in the past, so we should first consider how much an early investment in the stock would be worth today.

A $10,000 investment in Activision stock in the early 1990s, shortly after its initial public offering, would have grown to more than $700,000 at current price levels with dividends reinvested. That's not a million bucks, but it's within shooting distance. 

Virtually all those gains have come in the last 20 years. From the IPO in 1993 through 1999, the stock returned just 36%. But from the end of 1999 through 2009, the stock climbed almost 800%.

The stock has slowed its ascent in the last decade, but a 400%-plus gain since April 2010 is nothing to sneeze at. That's roughly a 15% annualized return. If the stock maintains that level of return to shareholders, a $10,000 investment could climb to more than $600,000 in the next 30 years.

Of course, a lot needs to go right for that happen, but Activision has a long history that shows it is up to the challenge.

How has the business performed

Check out this table, which shows Activision's cumulative growth in revenue, net income, and free cash flow divided into five-year periods going back to 1998.

Metric 1999 to 2004 2004 to 2009 2009 to 2014 2014 to 2019

Revenue

117% 352% 3% 47%

Net income

409% 45% 639% 80%

Free cash flow 

288% 1,910% 10% 40%

Data source: Activision Blizzard. Fiscal years 1999 through 2004 ended in March. Fiscal years 2009 through 2019 ended in December.

Growth has been lumpy, but that's the nature of the video game industry, where new franchise releases can cause a spike in sales, but a drought in new launches can cause growth to slow. What's important is that over many years Activision has delivered the goods.

Twenty years ago, when revenue and profits were growing quickly, the company was much smaller and releasing dozens of titles across platforms. In 2002, Activision made more than 50 gaming products to drive a significant increase in revenue that year. 

Over time, the production value of games increased, making it more expensive to create a top-tier title. During the early growth of the Call of Duty franchise from 2003 through 2009, management discovered that it would be more efficient and more rewarding to plow more resources into the most prominent franchises. 

The company merged with Blizzard Entertainment in 2008, as part of its strategy to increase margins and double down on the most popular (and profitable) franchises, such as Blizzard's World of Warcraft -- a subscription-based online game that is still a staple in the industry.

In the last 10 years, management has whittled the game portfolio down to the most profitable and widely played titles, including new ones like Overwatch. Gone are licensed games that Activision used to release regularly, including titles based on popular entertainment properties such as Spider-Man and James Bond. The reduction in its annual release slate might explain some of the slowing growth in recent years, but that didn't prevent the stock from heading higher over the last decade.

Remaining flexible with capital allocation

Kotick made two key deals in the last 10 years that significantly increased the value of the company. The first was the 2013 buyback of Vivendi's significant stake in Activision Blizzard. The Vivendi buyback reduced the share count by 37%, which boosted earnings per share by a proportionate amount. 

The second was the $5.9 billion acquisition of King Digital Entertainment in 2016. The King acquisition added one of the top-grossing mobile titles, Candy Crush, to Activision's arsenal, not to mention providing the company with tremendous mobile game development talent.

Investors will likely need to see more value-creating moves like these to see the stock reach millionaire-making potential. There hasn't been enough growth in revenue and earnings lately to really move the needle. The video game industry has been growing around 10% annually, and Activision has roughly mirrored that growth in the last five years. 

However, Kotick has been making deals and allocating capital to the best opportunities throughout his tenure, going back to the early 1990s. In his 2004 shareholder letter, he stated, "We have worked diligently to build a company that has the flexibility to seize opportunities, yet maintains the foresight to anticipate challenges and plan for its future." 

That is a perfect description of Activision Blizzard's growth strategy. You could think of it as an interactive entertainment holding company that seeks to allocate resources to the best returns within the growing $150 billion video game industry. 

Can you become a millionaire with Activision stock?

Whether the stock makes you rich will depend on how much you invest. Given the company's growth in revenue and earnings in the last five years, Activision Blizzard doesn't look like a company that will turn a small investment into a million-dollar position in the next 10 years.

If you want to feel like a video game tycoon, you need to be willing to hold the stock for several decades and let compounding do its magic. This growth stock should remain a profitable investment, given that it owns industry-leading franchises and continues to proactively invest in new opportunities such as in-game advertising, esports, and new titles.