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Varchild2008 (84.39)

Varchild lowers opinion on (ATVI) Activision Blizzard to HOLD

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June 16, 2009 – Comments (16) | RELATED TICKERS: ATVI

*yikes*

ATVI is overbought at the current level.  It recently touched a $13 handle and retreated to $12.39.
Even at $12.39 this one's overvalued.

The Video Game Sector is a mess.  Everyone's underestimating the economic impact to Young Dudes.  Young dudes aren't crowding the video game stores like they were last year.

Last year when I walked into a Mall.... There was no one shopping except for Aeropostale, Hot Topic, and Gamestop.  Venture elsewhere and you got "Scary Silence."

Now... Things have gotten spooky at Hot Topic...Frightening at Gamestop...and Bizzarre at even Best Buy.  

Granted... I can't testify that my opinion is worth anything.  It's not based on statistical fact.
It's based on my personal experiences throughoug the months of MAY & JUNE.

My Recommendation though is a $10.00 PUT option on ATVI for JULY or AUGUST.

I'm not saying everyone needs to dump their shares... My rating is a HOLD for an important reason....That being that a recovery will happen eventually....But right now...where the *&^% are the Summer Jobs for Teens?  No Summer Jobs....No Video Game buying!

1)  Origins of Wolverine Sales?   Disappointing in my opinion especially considering the excellent review ratings + quality of the title.

2)  Prototype?    I see a fully stocked shelf after fully stocked shelf.... No one is buying....I think this one disappoints.....Inspite of an excellent review from Gamespot (8.5 / 10).

ATVI will be a Q2 earnings MISS in my prediction....opinion...

I'll stomache that miss once I figure out how OPTIONS Work as that still is beyond me and for whatever reason no Investor including Dave and Tom Gardner want to explain how Options work without charging a FEE.




16 Comments – Post Your Own

#1) On June 16, 2009 at 8:32 AM, pj19 (< 20) wrote:

A 10.00$ put is a contract that allows you to sell 100 shares of ATVI between now and the strike date (either July or August in your example) at the price of 10$.  Practically this means if the price goes below 10$ on ATVI between now and then you can exercise your put and make the difference between the strike price and the market price.  When you exercise your put you are buying the security at the market price and selling it at the contract strike price. 

The thing to keep in mind is you are paying a premium per share for the option contract that needs to be covered for you to break even.  So for example, the last trade on an August put at a 10$ strike price was .25/share. That means even though you can exersice your put anytime ATVI goes under 10$, you won't profit until it goes under 9.75 to pay for the option premium.  Also this does not include commissions. 

 

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#2) On June 16, 2009 at 9:27 AM, Rehydrogenated (35.14) wrote:

People seem to think video games are defensive stocks. The idea is people will play more video games when they can't afford to go out drinking.

 I don't think people have stopped playing video games, but they just stop playing NEW video games. Or they play any of the thousands of free to play games out there.

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#3) On June 16, 2009 at 9:39 AM, Kierufu (< 20) wrote:

Gotta love how seemingly delusional most people trying to analyze the game industry are. ATVI, if anything, is severely undervalued. In addition to the already highly lucrative World of Warcraft, Blizzard is set to release the sequels to both their other main franchises, Diablo and Starcraft, either later this year or early next year while Activision is set to release the sequel to the multi-source Game of the Year (and two of the top-10 sellers of the past few years), Call of Duty. The last Modern Warfare game was the top-selling shooter of all time, blowing way past BUNGIE's Halo 3 since it isn't a platform exclusive.

If you'd paid any attention to this year's E3 convention, you'd know that ATVI has a lot of future hits--their new DJ Hero won several best-in-category E3 awards and despite your perceptions, PROTOTYPE is selling well; WOLVERINE was not expected to be a huge hit--movie-based games rarely are, especially considering the movie was WIDELY panned by critics! Blizzard has a new IP MMO in the works, and they've -proven- they know how to make a highly lucrative MMO. That's why Activision acquired them: they have an unparalleled dedication to quality.

To top it off, the video game industry is far from being "a mess." The only reason last month's NPD numbers are down is because last year saw the release of enormously anticipated titles like GTA4 this time last year. The industry is not a "steady demand" one like Coca Cola sales are. The product constantly changes.

That mindset is similar to movie/music execs arguing that "our profits are down; it must be because of piracy," despite that those artists may not have released any decent music or movies that year.

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#4) On June 16, 2009 at 11:02 AM, adeofinx (< 20) wrote:

You are really narrow in your analysis of this companies product line. You fail to comment on any of their financials and base you predictions of the video game market on a trip to your local mall. Don't forget rising Asian markets... you know the countries that play the majority of video games. Do your homework before sharing your opinion.

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#5) On June 16, 2009 at 11:09 AM, pizdec (< 20) wrote:

Ok, here is a deal. First, I am really mad that foolish "downgrade" is posted on google under ATVI news. If you look at members profile, you will notice that he has virtually no experiance in stock market, has high risk portofolio.

 Second, his has a view of a narrow minded person who doesn' understand that 

1. ATVI is undisputed leader in the field

2. Really good balance sheet

3. Many  great game$  coming that will generate huge revenue for the company

4. Well, ATVI is getting upgraded left and right by REPUTABLE sources like Goldman Sachs!

 

Most important, I will send e-mail to google with request to remove this from ATVI news. It's not that I am worried about him (no reason), but I don't like headlines which may mislead potential investor and make him/her think that ATVI was downgraded by serious analyst.

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#6) On June 16, 2009 at 11:53 AM, BigRedFed (< 20) wrote:

You're full of "it".  You don't even know how to trade options and you think we should believe your predictions.  Try exceeding earnings estimates for Q2.  People are playing MORE games.  WOW is still growing.  Blizzard has a new model for downloading games directly from their website.  There is GameFly, Direct2Drive, BlockBuster game rental service and various other video store game rental services that don't require people to go to the store but allow people to purchase the games or that buy large amounts of new games depending upon expected popularity.

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#7) On June 16, 2009 at 12:10 PM, TMFFlightsuit (24.25) wrote:

pizdec,

You said:

4. Well, ATVI is getting upgraded left and right by REPUTABLE sources like Goldman Sachs!

There's no such thing as a reputable institutional research desk--far too many conflicts of interest exist within those houses.

Be careful what conclusions you draw from these calls. I've heard too many stories to take the word of some sell-side analyst.

I'd advise you to pretty much ignore everything (no matter the apparent prestige of the source). Those people are serving a lot of masters--the least important of which is joe-schmoe investor, reading the report once its gone public.

Caveat emptor.

Nick

 

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#8) On June 16, 2009 at 1:02 PM, Varchild2008 (84.39) wrote:

Thanks for the help all on Options explanation.. Special thanks to pi19.

Based on what I am hearing... PUT options don't work the way I thought.. Therefore.. I can't say a $10 put makes any sense.

I apologize for my ignorance on Options...   I still say PUT Options on those ATVI shares for July August are probably a good thing....the Trend in Q2 is not good... Year over Year sales slump in April and May and Analysts are too Bullish on ATVI right now.

Maybe $12 Put??  $11?   Certainly $10 is too much.

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#9) On June 16, 2009 at 1:09 PM, Varchild2008 (84.39) wrote:

Kierufu said,

"Blizzard is set to release the sequels to both their other main franchises, Diablo and Starcraft, "

You are thinking TOO far ahead here...  That share price revolves around on a Quarter to Quarter basis...

Plus... We can all sit here shouting pre-mature praise over Starcraft II and Diablo III......  Both games will be excellent...

But, you have to realize that to justify a share price at $12.60 much less higher than that.... You are expecting BOTH titles to be absolute sales blockbusters...

If this was 2006... or 2007.... Then sure.. They will be blockbuster guaranteed...  Hurray! and stuff.

However... Everything revolves around what "South Korea" will do when it comes to Starcraft II. 

Last time South Korea (NOT AMERICA) was the primary sales for Starcraft.....  If South Korean's are unemployed and don't have the money to fork over for Starcraft II....

Any weakness we see in that country combined with the weakness we are already seeing this year in America... You have to be prepared for the WORST CASE SCENARIO.

But... Worst Case Scenario isn't DUMP ATVI SHARES.
That would be foolish....

Best thing one can do right now is to HOLD those ATVI shares and wait for Pullbacks... BIG ONES before ever daring to buy more shares.

I hold a 526 share count of ATVI (give or take) and the vast bulk of that is priced at no higher than $10.54.

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#10) On June 16, 2009 at 1:29 PM, msaleem1985 (60.38) wrote:

Hmm,

 

During its first month on the shelves, "Wolverine" sold a very healthy 433,000 units in the U.S., according to the NPD Group, which tracks industry sales.

 

 

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#11) On June 16, 2009 at 1:32 PM, Melaschasm (85.85) wrote:

The Blizzard side of Activision is booming.  WoW continues to bring in north of $150 million per month (revenue).  They have several major titles scheduled to launch over the next 18 months, which should help juice profits.

The Activision side faces a tougher situation, but they have a number of big titles that can be counted on for large sales $ over the next couple years.

I am not sure if this is the optimal buy price, but I do not recomend shorting this stock.

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#12) On June 16, 2009 at 1:38 PM, ChannelDunlap (< 20) wrote:

Thanks for sharing you thoughts with us, Varchild.  And thanks for probing about Options, something I too have had a tough time getting a grasp of.  However, as someone long on ATVI, I have to respectfully disagree with you.  The reasons have all ben listed here already; Diablo 3, Starcraft 2, Modern Warfare 2, Tony Hawk, the *** Hero series, and last but not least, World of Warcraft revenue.

Have you SEEN WoW players?  They are straight up junkies.  Investing in blizzard right now is like investing in Columbia in the 80's.  

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#13) On June 16, 2009 at 2:27 PM, pizdec (< 20) wrote:

Varchild is a stupid moron. Fool.com is fool of fools like him. Said

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#14) On June 16, 2009 at 3:10 PM, pizdec (< 20) wrote:

Reuters: ATVI managment just downgraded "varchild" from "idiot" to "clueless moron", in addition they added that he should refinance his basement to short shares of ATVI, preferrably at current levels. 

 

Comment: I guess they want to take advantage of idiots like him to grab more shares with a good discount. lol 

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#15) On June 16, 2009 at 5:31 PM, Varchild2008 (84.39) wrote:

I'm a moron for recommending a Hold?
I'd be a moron for recommending ATVI as a SELL...

*Sheesh*

A Hold means "Hold"  as in.. Don't Bail out of ATVI....Don't Sell your Shares....

If you are bullish on ATVI.. take it to mean "DON'T SELL"

Cause I know for a fact if I posted "DON'T SELL"  no one would argue with me here and accuse me of being a moron.

I just want to make sure everyone realizes that 9.4% unemployment AND CLIMBING (given extended stay + 7th Flags + MySpace layoffs).... This is unprecendented territory in which investors SHOULD BE cautious.

I'd like to see ATVI  simply trade between $11.50 and $12.50 prior to the Earnings Report....   Not $13.00+

I am in complete agreement with S&P's $14.00 price target... But... Tomorrow????  Next Week it's $14?  No Waaaaay!

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#16) On June 16, 2009 at 5:36 PM, Varchild2008 (84.39) wrote:

*CORRECTION*

My Stake in ATVI is 565 right now...

I plan on holding it...for quite awhile.. I won't be motivated to increase my stake unless this one drops back at a $11 handle.

I guarantee that the "STEAM" that this stock had as it marched its way and powered its way beyond $13.00 a share is gone....
That was a nice ride up.. But now investors have plenty to be cautious about given the trend doesn't look so HOT for Video Games right now.

And if it weren't for my personal experiences in GameStop and BestBuy stores... I'd be buying it at $13.00 a share.... I would...

Motley Fool recommended the darn thing well past $16.00.

But... whatever.. I'll wait for a better pullback than the one we got today and yesterday.  I say ATVI trends down for now for a few more days.

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