New 'Call of Duty' release energizes Activision shares

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Credit: Activision

Activision Blizzard's recent stock gains may be a sign that the company's new Call of Duty: Black Ops 4 is ready to take on Fortnite in the fight for "battle royale" gamers.

Blackout, the newest style of play in the billion-dollar Call of Duty franchise, has impressed analysts in beta testing, and the YouTube trailer has more than 4 million views ahead of the game's Oct. 12 release. The new mode "should be highly engaging and could later be monetized," according to Goldman Sachs analyst Christopher Merwin.

Analysts expect further upside to Activision shares through the holiday shopping season. The stock has rebounded about 25 percent from its April lows after Fortnite's popularity triggered a broad sell-off in video game stocks. The free game helped spark interest in the battle-royale mode, where 100 people play at once. Electronic Arts is also planning a battle-royale mode for its upcoming Battlefield V game, due to be released in November.

Morgan Stanley estimates that every 1 million units of Black Ops 4 that are sold will increase Activision's earnings per share by about 1 percent. More monthly active users could also lead to more monetization opportunities as players seek a more customized experience by making in-game purchases. Piper Jaffray expects that the video game will sell as many as 5 million more units than previous versions of Call of Duty.

As Activision prepares for its upcoming release, Fortnite's growth may also be slowing. Piper Jaffray's analysis of video game viewership data from streaming platform Twitch shows a decline for Fortnite in August, which analysts called the steepest monthly decline they've seen. Meanwhile, cumulative viewership of Activision titles gained 48 percent, driven by World of Warcraft and Destiny 2.

-- Bloomberg News

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