ATVI – Market expectations are for Uniform ROA to rebound, but management may be concerned about Call of Duty Mobile, investments, and player engagement

• Activision Blizzard, Inc. (ATVI:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 25.1x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their Call of Duty mobile franchise, creative and commercial talent investments, and player engagement
  
  
• Specifically, management may lack confidence in their ability to continue investing in creative and commercial talent, strengthen their digital relationship with their players, and sustain overall net bookings growth. Moreover, they may have concerns about the sustainability of strong momentum across game releases and the further potential of their mobile game development strategy. Management may also lack confidence in their ability to maintain record time spent on the Call of Duty franchise, further develop enhancements for Call of Duty Mobile, and expand and retain gamer interest in their Diablo franchise. Finally, they may be exaggerating the potential of Sledgehammer Games’ new premium release this year, and they may lack confidence in their ability to sustain strong cash flow generation and continue paying annual dividends