Activision Blizzard: Buy or Sell?
Activision Blizzard (NASDAQ: ATVI) is kind of a misfit in the investment world. It pays a dividend, so you might expect it to be a mature business with slow growth rates. But you'd be wrong. Activision Blizzard increased its revenues by 52% year over year in its most recent quarter, and profits jumped almost 200%. This is a fast-growing business right now.
Yet its P/E ratio values it like a slow-growth business. Investors were paying 25 times forward earnings a year ago, and they're paying 27 times forward earnings now. So am I seeing things? Is that 200% profit growth a mirage?
Maybe it's a temporary bounce related to the COVID-19 pandemic, and growth will slow significantly once we're all vaccinated. That's possible. But there's another possibility. Maybe the market has mispriced Activision Blizzard -- significantly.
Source Fool.com
