Activision Blizzard's (NASDAQ:ATVI) stock is limping into the month of October, down 13% over the last two weeks. And while quick market moves like that can be random, there's no mystery to what caused this particular one.
The dive started just after the game publisher's launch of its new brand, Destiny. That title isn't a flop, but it sure hasn't lived up to the intense prerelease hype.
Activision has a busy few weeks ahead before it officially updates investors on Destiny's performance and its broader business by posting quarterly earnings results in early November. Here are a few key things for shareholders to watch in the meantime.
The publisher kicks off October with the release of Skylanders: Trap Team, the fourth installment in the profitable toys-to-life category that it created back in 2011. Since then the Skylanders franchise has generated about $1 billion of revenue from video game and toy figurine sales each year.
This year's installment breaks fresh ground by launching not only on the major video game consoles, but also on a wide range of tablets. So, for the first time gamers will be able to play a full AAA title from Activision on mobile devices as small as an Apple iPad Air. Investors should expect this move to be the start of a bigger push by Activision into mobile gaming. Its free-to-play title Hearthstone, for example, is playable on tablets already, but should be making its way to iPhones in the next few months.
Skylanders' main competition will again be coming from Disney. The House of Mouse released its Infinity 2.0 title last week, with the big draw being new characters plucked from the Marvel universe, including the recent movie hit Guardians of the Galaxy. Infinity 2.0 has received mixed critical reviews since its launch, accumulating a 72 score on Metacritic so far. But help from a deep catalog of popular characters should keep it a strong rival to Skylanders this holiday season.
Call of Duty and World of Warcraft refreshes
Activision is also putting the final touches on releases for its other two billion-dollar franchises. Call of Duty: Advanced Warfare launches on Nov. 3, and World of Warcraft: Warlords of Draenor ships a week after that.
Unlike with Skylanders releases, Activision typically provides launch sales numbers for both of these franchises soon after they hit retail shelves, which means that investors can get an early read on their popularity. Here are the important comparison points to keep in mind.
Last year's Call of Duty: Ghosts did $1 billion of sales to retailers as of its first day of availability. With a less-competitive release window this year, and with a bigger installed base of next-gen consoles, investors should be looking for Advanced Warfare to exceed that figure this time.
As for Warcraft, the last major expansion in 2012 sold 2.7 million copies in its first week and quickly pushed the game's subscriber base back above 10 million. WoW is starting from a much smaller base this year, closer to 7 million than 9 million. That makes it unlikely that we'll see as big a revenue or subscriber bounce this year, but anything over 2 million in launch-week unit sales should be considered a win for the company.
Bottom line numbers
Overall, Wall Street is expecting Activision to post $0.13 a share in profit and $1 billion in quarterly revenue next month. Those figures would represent a 62% earnings jump and a 52% sales bounce over the prior year period. The quarterly forecasts also haven't come down at all since Destiny's somewhat disappointing release. But that shouldn't be a surprise, given how much more Activision has going on this year.
Demitrios Kalogeropoulos owns shares of Activision Blizzard, Apple, and Walt Disney. The Motley Fool recommends Activision Blizzard, Apple, and Walt Disney. The Motley Fool owns shares of Activision Blizzard, Apple, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.