Bobby Kotick, via Gamesbeat
GamesBeat: And was the sexual harassment investigation factor in this, as it certainly seemed to affect the stock price?
Kotick: I think what affected the stock price more than that is pushing out Overwatch and Diablo. And then I think people started to see that this year’s Call of Duty wasn’t performing as well. So I think certainly the filing and the Wall Street Journal article contributed to that, but stocks go up and down for a variety of reasons. I think our view was that at $95 a share with all cash, that’s a really great deal for our shareholders. And so that was an easy and independent judgment. It’s a great deal.
Other talking points raised in the article include issues of anti-trust and the increased competition within big-name gaming, as trillion dollar companies like Google, Amazon, Apple, Facebook, and Netflix have all ramped up development on their own projects. Citing his strong relationship with Microsoft CEO Satya Nadella and Head of Gaming Phil Spencer, Kotick explains that the need for bigger production teams and more resources made Microsoft the ideal partner, while the offer of 45% premium over the current stock price made selling and easy decision and good deal for shareholders.
Meanwhile, Bloomberg’s Jason Schreier has disputed Kotick’s statement, arguing an exercise in vanity and attempt to pass blame onto development teams rather than Kotick’s own failure of leadership in not curtailing workplace issues.
Both may be true. It’s worth pointing out that while ATVI’s faltering stock price was certainly affected by ongoing news of the discrimination lawsuit, the drop following Activision’s third quarter results conference call and associated delay of Diablo 4 and Overwatch 2 was equally dramatic and much more sudden. News of the lawsuit first broke on July 21st of last year, when the stock price was just over $91. Over the next four months, that news dominated everything related to Activision Blizzard while the stock price the price fluctuated rapidly, dropping approximately 13% to $79 by November 1st. The following day, the the third quarter results announced Diablo 4 and Overwatch 2 were being delayed and the price immediately dropped by 14% overnight – a bigger fall than the previous four months combined.
Overwatch 2 and Diablo 4 being delayed had a bigger impact on the stock price in a single day than the entire four months since California’s lawsuit was made public.
While there are certainly a combination of factors at work, such as the Wall Street Journal article causing further drop just as the stock started trending up again, the impact of those delays should not be discounted. Reality of the matter is that the potential for future earnings and the declining expectations caused by delays is a very serious matter to hardcore investors.
The third body blow to ATVI’s stock price hit with the release of a scathing article by the Wall Street Journal.
Our Priest guide writer and Mythic Dungeon International host AutomaticJak also released a video on the subject of Activision Blizzard’s sale, in which he breaks down the financial impact of Microsoft’s record breaking acquisition. While a professional caster/streamer for the past 4 years, Jak is also a graduate of George Mason University with a Bachelor’s degree in Finance. One great adage of investing is “Buy what you Know” and so Jak closely follows Activision’s finances, explaining his trades and helping others understand the company’s financial outlook. While many view the departure of Bobby Kotick as a win for those who wish him to be held accountable for the controversies surrounding Activision Blizzard, this latest installment of Jak’s financial series explains how Kotick turned a downward trend into a golden opportunity to profit, while distancing himself from the company’s legal trouble.