Discounted Cash Flow (DCF) Analysis Levered

Activision Blizzard, Inc. (ATVI)

$76.47

-0.73 (-0.95%)

All numbers are in Millions, Currency in USD

Stock DCF: 127.13 | 76.47 | undervalue

Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	7,017	7,500	6,489	8,086	8,803	9,394.59	10,025.94	10,699.72	11,418.77	12,186.15
Revenue (%)
Operating Cash Flow	2,213	1,790	1,831	2,252	2,414	2,609.71	2,785.09	2,972.26	3,172.01	3,385.18
Operating Cash Flow (%)
Capital Expenditure	-155	-131	-116	-78	-80	-143.11	-152.73	-162.99	-173.95	-185.64
Capital Expenditure (%)
Free Cash Flow	2,058	1,659	1,715	2,174	2,334	2,466.60	2,632.37	2,809.27	2,998.06	3,199.54

Weighted Average Cost Of Capital

Share price	$ 76.47
Beta	0.555
Diluted Shares Outstanding	778
Cost of Debt
Tax Rate	14.70
After-tax Cost of Debt	2.24%
Risk-Free Rate
Market Risk Premium
Cost of Equity	5.352
Total Debt	3,608
Total Equity	59,493.66
Total Capital	63,101.66
Debt Weighting	5.72
Equity Weighting	94.28
Wacc

Build Up Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	7,017	7,500	6,489	8,086	8,803	9,394.59	10,025.94	10,699.72	11,418.77	12,186.15
Operating Cash Flow	2,213	1,790	1,831	2,252	2,414	2,609.71	2,785.09	2,972.26	3,172.01	3,385.18
Capital Expenditure	-155	-131	-116	-78	-80	-143.11	-152.73	-162.99	-173.95	-185.64
Free Cash Flow	2,058	1,659	1,715	2,174	2,334	2,466.60	2,632.37	2,809.27	2,998.06	3,199.54
WACC
PV LFCF						2,230.05	2,262.93	2,296.29	2,330.14	2,364.49
SUM PV LFCF										12,077.61

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	5.17
Free cash flow (t + 1)	3,263.53
Terminal Value	102,950.56
Present Value of Terminal Value	80,014.62

Intrinsic Value

Enterprise Value	92,092.23
Net Debt	-6,815
Equity Value	98,907.23
Shares Outstanding	778
Equity Value Per Share	127.13