As of May 22, 2025, Activision Blizzard Inc's estimated intrinsic value ranges from $58.39 to $124.34 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $103.50 | +9.6% |
| Discounted Cash Flow (5Y) | $87.40 | -7.4% |
| Dividend Discount Model (Multi-Stage) | $64.23 | -32.0% |
| Dividend Discount Model (Stable) | $124.34 | +31.7% |
| Earnings Power Value | $58.39 | -38.2% |
Is Activision Blizzard Inc (ATVI) undervalued or overvalued?
With the current market price at $94.42, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Activision Blizzard Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.5 | 0.6 |
| Cost of equity | 6.2% | 8.2% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 14.1% | 15.2% |
| Debt/Equity ratio | 0.05 | 0.05 |
| After-tax WACC | 6.0% | 8.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $87 | $61,611M | 87.5% |
| 10-Year Growth | $104 | $74,277M | 77.2% |
| 5-Year EBITDA | $74 | $50,985M | 84.9% |
| 10-Year EBITDA | $89 | $62,707M | 73.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $2,673M |
| Discount Rate (WACC) | 8.0% - 6.0% |
| Enterprise Value | $33,326M - $44,235M |
| Net Debt | $(7,158)M |
| Equity Value | $40,484M - $51,393M |
| Outstanding Shares | 787M |
| Fair Value | $51 - $65 |
| Selected Fair Value | $58.39 |
| Metric | Value |
|---|---|
| Market Capitalization | $74290M |
| Enterprise Value | $67132M |
| Trailing P/E | 34.31 |
| Forward P/E | 42.92 |
| Trailing EV/EBITDA | 21.55 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 9.10% |
| Debt-to-Equity Ratio | 0.05 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $31.05 |
| Discounted Cash Flow (5Y) | 25% | $21.85 |
| Dividend Discount Model (Multi-Stage) | 20% | $12.85 |
| Dividend Discount Model (Stable) | 15% | $18.65 |
| Earnings Power Value | 10% | $5.84 |
| Weighted Average | 100% | $90.24 |
Based on our comprehensive valuation analysis, Activision Blizzard Inc's weighted average intrinsic value is $90.24, which is approximately 4.4% below the current market price of $94.42.
Key investment considerations:
Given these factors, we believe Activision Blizzard Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.