What happened
Shares of Activision Blizzard (ATVI +0.00%) fell 14% on Wednesday after the digital-entertainment company postponed two major game launches.
So what
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.
Now what
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.
