MSFT Stock Retreats from Record High Although Microsoft Unveils New Xbox Games

UTC by Steve Muchoki · 3 min read
MSFT Stock Retreats from Record High Although Microsoft Unveils New Xbox Games
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Microsoft Corp. stock (Nasdaq: MSFT) fell 4.35% on Thursday to close the day at $202.54, however it was 0.54% up in the after hours. Shares were downgraded to ‘hold’ rating despite the company unveiling new Xbox games.

American multinational technology company, Microsoft Corporation (NASDAQ: MSFT) has largely benefited from the coronavirus pandemic in comparison with most companies out there. In the past three months, the shares have risen over 16% after breaking out to reach new highs. On July 9, the Microsoft stock reached its all time high, $216.38. However, since then it has experienced a tough resistance level and faces the risk of retracing before continuing with the rally.

During yesterday’s market close, the shares were trading at $202.54, after shedding $9.21 during the day. The drop, however, slowed during the after hours where the share value had risen with about 0.54%. The sudden drop does not coincide with the recently released fourth quarter results that indicated the company had significantly recorded higher revenue by around 13% to hit $38 billion.

Analysts Call on Microsoft Stock

However, the drop might have been caused by a downgraded rating from one analyst despite the general consensus agreement on the Microsoft shares rally. Oppenheimer analyst Timothy Horan downgraded Microsoft to “perform” from “outperform” on slowing sales growth and margin expansion as well as the elevated stock price. Horan noted:

“Services businesses usually lag the economy by six months or so. Major business failures and employee downsizing at larger enterprises will hurt MSFT’s revenue growth. The stock is trading at historically high multiples while facing difficult revenue comps for next year”.

Different opinions from other analysts argue that the company is able to sustain the rally due to its diversified business. Keith Weiss an analyst at Morgan Stanley, who has an overweight rating and a $230 price target mentioned:

“While not immune to the weaker macro, the increasing priority of digital transformation and a broad solution suite enables Microsoft to sustain momentum through a difficult environment”.

Some of the businesses that the company has diversified and successfully delivered is in the gaming industry, especially aided by the ongoing coronavirus pandemic.

Microsoft Corporation Game Inovations

In a bid to continue winning more customers in a hotly contested gaming market, the company announced the release of new video games. “Halo Infinite” title, which is the sixth main instalment in the “Halo” franchise, is expected to showcase the company’s innovation. The game series is arguably one of the defining franchises of Microsoft’s Xbox brand.

Other games featured at Microsoft’s big event Thursday included: “Avowed”, “State of Decay 3”, “As Dusk Falls”, “Forza Motorsport”,“The Gunk”, and “Tell Me Why”. They are expected to compete with other gaming companies like Sony that recently unveiled its PS5.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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