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Shares of Activision Blizzard (ATVI +0.00%) fell 14% on Wednesday after the digital-entertainment company postponed two major game launches.
Revenue in the video game maker's Blizzard segment jumped 20% to $493 million, fueled by strong sales of Diablo II: Resurrected. Meanwhile, revenue in the company's King mobile gaming division leaped 22% to $652 million, driven by in-app purchases and advertising sales in popular games like Candy Crush. However, revenue for its Activision unit decreased by 17% to $641 million, due in part to a decline in monthly active users.
Overall, Activision Blizzard's revenue rose 6% year over year to $2.1 billion, while its earnings per share increased 5% to $0.82. Investors, however, appeared to focus on the company's announcement that it would delay the launch of highly anticipated installments of two of its most popular franchises.
Image source: Getty Images.
"While we are still planning to deliver a substantial amount of content from Blizzard next year, we are now planning for a later launch for Overwatch 2 and Diablo IV than originally envisaged," chief operating officer Daniel Alegre said during a conference call with analysts.
The news drove several analysts to slash their price targets for Activision Blizzard's shares. For one, Morgan Stanley analyst Brian Nowak cut his price forecast from $120 to $65 after reducing his earnings-per-share estimates by 30% in fiscal 2022 and 23% in 2023.
For another, MKM Partners analyst Eric Handler lowered his stock-price target from $108 to $75, due to his now "substantially" lower growth projections for Activision Blizzard in the year ahead.