Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul><li>The dynamics of gaming industry are changing rapidly after Microsoft’s recent acquisition of Activision Blizzard for a phenomenal valuation.</li><li>One would expect Activision’s rival, Electronic Arts to gain a valuation premium after this event especially given that the company’s financial performance has been decent.</li><li>EA's live services across its portfolio have delivered strong recurring revenue and year-over-year growth in the previous quarter and it remains fundamentally strong.</li></ul>

The dynamics of gaming industry are changing rapidly after Microsoft’s recent acquisition of Activision Blizzard for a phenomenal valuation.One would expect Activision’s rival, Electronic Arts to gain a valuation premium after this event especially given that the company’s financial performance has been decent.EA's live services across its portfolio have delivered strong recurring revenue and year-over-year growth in the previous quarter and it remains fundamentally strong.

Electronic Arts: Growing In A Fast-Evolving Gaming Industry 02/22

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<ul>
<li>A blizzard of cost synergies we conservatively estimate at $500MM from lower distribution commissions, hosting costs, and cutting ATVI's highly paid C-Suite.</li>
<li>Multiple strategic benefits: Catalyzes Microsoft's XCloud streaming game service and Game Pass subscription offering....potentially offers greater leverage for app store negotiations with Apple and Google.</li>
<li>Accretive on valuation alone...MSFT is paying a 10% discount to ATVI's 23x average forward PE from last few years. MSFT's 11x forward P/S vs. ATVI's 5.5x revalues ATVI's revenues 2x.</li>
</ul>


A blizzard of cost synergies we conservatively estimate at $500MM from lower distribution commissions, hosting costs, and cutting ATVI's highly paid C-Suite.
Multiple strategic benefits: Catalyzes Microsoft's XCloud streaming game service and Game Pass subscription offering....potentially offers greater leverage for app store negotiations with Apple and Google.
Accretive on valuation alone...MSFT is paying a 10% discount to ATVI's 23x average forward PE from last few years. MSFT's 11x forward P/S vs. ATVI's 5.5x revalues ATVI's revenues 2x.


Microsoft’s Activision Acquisition Is a Stupendous Deal

<ul><li>The gaming industry was one of the biggest beneficiaries of the Covid-19 pandemic which gave rise to a large community of gamers across the globe.</li><li>Today, we are looking to analyze 2 global gaming majors on the development side - Electronic Arts and Activision Blizzard.</li><li>Both these companies have been an active part of the heavy consolidation taking place in the fast-growing industry and are bound to attract investor interest.</li></ul>

The gaming industry was one of the biggest beneficiaries of the Covid-19 pandemic which gave rise to a large community of gamers across the globe.Today, we are looking to analyze 2 global gaming majors on the development side - Electronic Arts and Activision Blizzard.Both these companies have been an active part of the heavy consolidation taking place in the fast-growing industry and are bound to attract investor interest.

Electronic Arts (EA) vs. Activision Blizzard - Which Gaming Major Is The Better Performer? (11/2021)

<ul><li>Electronic Arts delivered a decent quarterly result with net revenue of $1.55 billion and net bookings of $1.34 billion.</li><li>It Takes Two launched at the end of the previous quarter and performed admirably throughout the first quarter.</li><li>Overall, we are positive about the company's prospects and maintain our 'Hold' rating on the stock with a revised target price.</li></ul>

Electronic Arts delivered a decent quarterly result with net revenue of $1.55 billion and net bookings of $1.34 billion.It Takes Two launched at the end of the previous quarter and performed admirably throughout the first quarter.Overall, we are positive about the company's prospects and maintain our 'Hold' rating on the stock with a revised target price.

<p>In the past few weeks, Facebook changed its name to Meta, showing its emphasis on the concept as central to its future. Nvidia and AMD have been skyrocketing as investors speculate that in the future, all the large platforms will be putting huge money behind the concept. AMD just got a big win at Facebook to help power its Metaverse. Facebook is putting soooo much behind the metaverse…its almost a shame they couldn’t just buy Roblox.</p><p>This was a fine fine quarter for Roblox, the platform is aging up, growth accelerating internationally, platform extensions abound. But…consensus bookings and revenue estimates for FY22 rose 1% and 3.5% respectively…not the type of revisions that merits a 30% move higher. 8% short interest doesn’t sound like much, but 4 days to cover on a relatively thin float seems to be the culprit. We would take profits on Roblox and look to re-engage in the $80s.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

In the past few weeks, Facebook changed its name to Meta, showing its emphasis on the concept as central to its future. Nvidia and AMD have been skyrocketing as investors speculate that in the future, all the large platforms will be putting huge money behind the concept. AMD just got a big win at Facebook to help power its Metaverse. Facebook is putting soooo much behind the metaverse…its almost a shame they couldn’t just buy Roblox.This was a fine fine quarter for Roblox, the platform is aging up, growth accelerating internationally, platform extensions abound. But…consensus bookings and revenue estimates for FY22 rose 1% and 3.5% respectively…not the type of revisions that merits a 30% move higher. 8% short interest doesn’t sound like much, but 4 days to cover on a relatively thin float seems to be the culprit. We would take profits on Roblox and look to re-engage in the $80s.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

United States

Electronic Arts Inc. develops, publishes, and distributes branded interactive entertainment software worldwide for video game consoles, personal computers, handheld game players, and cellular handsets. The Company also provides online game-related services.

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Electronic Arts (EA US)

Electronic Arts: Growing In A Fast-Evolving Gaming Industry 02/22

The dynamics of gaming industry are changing rapidly after Microsoft’s recent acquisition of Activision Blizzard for a phenomenal valuation. One...

Baptista Research

Microsoft’s Activision Acquisition Is a Stupendous Deal

Microsoft's acquisition of Activision is a homerun by any measure: strategically, financially, and on valuation. We expect the level of synergies...

Aaron Gabin

Electronic Arts (EA) vs. Activision Blizzard - Which Gaming Major Is The Better Performer? (11/2021)

The gaming industry was one of the biggest beneficiaries of the Covid-19 pandemic which gave rise to a large community of gamers across the...

Baptista Research

Electronic Arts Inc. - Investment Thesis

Electronic Arts delivered a decent quarterly result with net revenue of $1.55 billion and net bookings of $1.34 billion. It Takes Two launched at...

Baptista Research

Roblox 3Q21: 30% Move for THESE Results?

Fine quarter for Roblox, but consensus bookings and revenue estimates for FY22 rose 1% and 3.5% respectively. We would take profits on Roblox and...

Aaron Gabin

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