Activision's recent Call of Duty: Black Ops 2 isn't selling as well as it should, at least according to Sterne Agee analyst Arvind Bhatia, who now recommends investors to cease buying stock in Activision until it begins to make a comeback.Black Ops 2 came out a few weeks ago and, while it once again generated huge profits for Activision, it didn't sell as well as its predecessor, Call of Duty: Modern Warfare 3.
As such, analyst Arvind Bhatia, who works for Sterne Agee, has just released a special note to investors in which he downgrades the rating given to Activision Blizzard from a Buy to a Neutral, meaning those who don't have shares in the company shouldn't invest in it.
"We believe unit sales of Call of Duty: Black Ops II are tracking down double digits year over year. Our checks show initial sales of CoD: Black Ops II at some retailers were down as much as 20%. Subsequently, it appears sales of CoD did pick up a bit over the Thanksgiving holiday," he said, via Kotaku.
While Bhatia's statement is filled with financial terms, he highlights that the sales trend of Black Ops 2 will be below that of Modern Warfare 3, which was also below that of Black Ops 1.
"We think the current sales curve suggests CoD: Black Ops II unit sales in its first year could ultimately be down 10% to 15% y/y. If we are right, this would be the second year in a row this critical franchise will have seen units decline (Call of Duty: Modern Warfare 3 is down an estimated 5% versus Call of Duty: Black Ops)."
The analyst also offers three reasons for Black Ops 2's weak sales, from its lower review scores, to the launch that was right after Halo 4 and right before Thanksgiving.
"We think there are possibly three reasons for the weakness in Black Ops II:
1) We note that ratings for Black Ops II on average were slightly lower than Modern Warfare 3, which may have impacted initial sell-through;
2) Black Ops II launched only a week after Halo 4, which could have impacted its sales;
3) Black Ops II launched only a week before Thanksgiving, which may have caused some consumers to delay purchases in anticipation of potential deals/discounts. "
While it's still a bit early to say if the Call of Duty franchise has peaked, it's going to be interesting to see what Activision and its studios will do to once again make it break sales records.