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The Microsoft (MSFT) deal with Activision Blizzard is expected to close before July 2023.
Microsoft Corporation (NASDAQ: MSFT) stock and those of game publisher Activision Blizzard Inc (NASDAQ: ATVI) are moving in opposite directions with the latter trading at its worst levels since the proposed acquisition bid from the former.
MSFT stock closed Wednesday’s trading up 4.81% to $283.22 as the Redmond, Washington-based company posted better than expected earnings. Microsoft reported revenue of $49.36 billion as against the $49.05 billion expected by analysts, according to Refinitiv. Earnings Per Share (EPS) came in at $2.22 per share, adjusted, compared to the $2.19 as expected by analysts, according to Refinitiv.
Microsoft continued its rally in the pre-market, jumping by 1.51% to $287.49 per share at the time of writing.
The opposite was the case for Activision Blizzard whose shares have slipped to the lowest point since Microsoft announced it will be acquiring the company for about $59 billion in January. The deal, which is adjudged as the biggest tech deal in the United States thus far is being feared to pull through considering the many woes around the game company.
To begin with, Activision Blizzard reported a slump in its Monthly Active Users (MAUs) for Activision, its division that publishes the Call of Duty game. Additionally, the latest release of the game, Call of Duty: Vanguard which was introduced in November last year did not receive a very astounding review on the global scale. This affected subscriptions which plunged by about 29%, affecting revenue across the board.
ATVI stock was down by 1.25% to $76.10, a price figure that is 20% less than the $95 price that Microsoft was expected to acquire the firm.
MSFT Deal amid ATVI Stock and Company’s Regulatory Woes
The Microsoft (MSFT) deal with Activision Blizzard is expected to close before July 2023, a deal that may be revalued considering the state of the company’s stock at the moment. The company’s regulatory challenges also lend sources for concern.
“Activision Blizzard received a voluntary request for information from the SEC and a grand jury subpoena from the DOJ, both of which appear to relate to their respective investigations into trading by third parties – including persons known to Activision Blizzard’s CEO – in securities prior to the announcement of the proposed transaction,” the company said in a regulatory filing earlier this month.
Per the state of affairs with ATVI, MoffettNathanson analyst Clay Griffin projected a $95 price target to match up with the acquisition price.
“There’s always a non-zero probability that it does get blocked,” Griffin said. “The recent trading of Activision is really indicative of people’s concerns of what happens in downside scenarios.”
The $95 projection from Griffin came off as the consensus target set on the stock by the majority of 17 analysts profiled by FactSet.