What Happened to Activision Blizzard Stock?

The trajectory of Activision Blizzard stock (ATVI) is a story punctuated by both spectacular highs and tumultuous lows. The most significant event impacting its recent performance is undoubtedly the acquisition by Microsoft, which concluded in October 2023. Prior to this, the stock price was heavily influenced by a complex interplay of factors, including game releases, financial performance, and, critically, the sexual harassment and discrimination lawsuit filed by the California Department of Fair Employment and Housing (DFEH) in July 2021. This lawsuit triggered a massive reputational crisis, internal investigations, and leadership changes, all of which weighed heavily on investor confidence. Ultimately, the Microsoft acquisition provided a much-needed lifeline, effectively capping the stock’s potential downside and offering shareholders a premium over the pre-acquisition price. The stock is no longer independently traded as of October 13, 2023, since it is now a part of Microsoft.

Factors Affecting ATVI Stock Before the Acquisition

The Activision Blizzard stock price experienced a rollercoaster ride leading up to the acquisition. Several key factors played a significant role in this fluctuating performance.

Game Releases and Financial Performance

Like any gaming company, Activision Blizzard’s stock was heavily tied to the success of its game franchises. Blockbuster titles like Call of Duty, World of Warcraft, and Overwatch have historically been major revenue drivers. A successful launch, positive reviews, and strong player engagement typically resulted in a stock price surge. Conversely, delays, critical failures, or waning player interest could trigger a sell-off. Investors meticulously analyzed pre-order numbers, download rates, and in-game spending to gauge the company’s financial health and predict future performance. Quarterly earnings reports were closely scrutinized, with analysts and investors paying close attention to revenue growth, profitability margins, and forward-looking guidance.

The Sexual Harassment and Discrimination Lawsuit

The lawsuit filed by the DFEH in July 2021 was a watershed moment for Activision Blizzard. The allegations of widespread sexual harassment, discrimination, and a “frat boy” culture shocked the industry and tarnished the company’s reputation. The immediate impact was a sharp decline in the stock price, reflecting investor concerns about potential legal liabilities, boycotts, and damage to the company’s brand. The negative publicity surrounding the lawsuit also led to employee walkouts, calls for leadership changes, and increased scrutiny from regulatory bodies. The ongoing investigation and associated legal costs further strained the company’s financial resources and added to the uncertainty surrounding its future.

Leadership Changes and Internal Restructuring

In response to the allegations and mounting pressure, Activision Blizzard underwent a period of significant leadership changes. Several high-ranking executives were either fired or resigned, including former CEO Bobby Kotick. While these changes were intended to address the company’s cultural issues and restore investor confidence, they also created instability and uncertainty in the short term. The internal restructuring efforts aimed at creating a more inclusive and equitable workplace were a complex and time-consuming process. Investors were wary of the potential disruption to ongoing projects and the overall impact on the company’s productivity.

The Microsoft Acquisition: A Game Changer

The announcement of Microsoft’s intent to acquire Activision Blizzard in January 2022 fundamentally altered the landscape. The deal, valued at $68.7 billion, offered Activision Blizzard shareholders a substantial premium over the prevailing stock price at the time. This news provided immediate support for the stock, effectively setting a floor below which the price was unlikely to fall significantly.

Regulatory Hurdles and Antitrust Concerns

The acquisition faced intense scrutiny from regulatory bodies around the world, including the U.S. Federal Trade Commission (FTC), the UK’s Competition and Markets Authority (CMA), and the European Commission. These regulators raised concerns about potential antitrust violations, arguing that the deal could give Microsoft an unfair advantage in the gaming market. The regulatory hurdles created significant uncertainty about the deal’s ultimate fate, causing fluctuations in the stock price as investors reacted to news and rumors about the approval process.

Final Approval and Completion of the Acquisition

After months of legal battles and negotiations, the Microsoft acquisition of Activision Blizzard finally closed in October 2023. The regulatory hurdles were overcome through concessions made by Microsoft, including licensing agreements for Activision Blizzard games on competing platforms. The completion of the acquisition marked the end of Activision Blizzard as an independent company and the delisting of its stock from the Nasdaq.

FAQs About Activision Blizzard Stock

1. Why did Microsoft acquire Activision Blizzard?

Microsoft acquired Activision Blizzard to strengthen its position in the gaming industry. The acquisition brings a vast portfolio of popular game franchises under Microsoft’s umbrella, including Call of Duty, World of Warcraft, and Overwatch. Microsoft also aims to leverage Activision Blizzard’s expertise in mobile gaming to expand its reach to new markets. The acquisition will also bolster Microsoft’s Game Pass subscription service and allow them to compete better with Sony’s PlayStation.

2. What was the acquisition price per share?

Microsoft acquired Activision Blizzard for $95 per share.

3. What happened to Activision Blizzard shareholders after the acquisition?

Activision Blizzard shareholders received $95 in cash for each share they owned. The ATVI stock was delisted from the Nasdaq, and shareholders who held shares through the acquisition date had their shares automatically converted to cash.

4. How did the sexual harassment lawsuit affect the stock price?

The sexual harassment lawsuit filed by the DFEH had a significantly negative impact on Activision Blizzard’s stock price. The allegations of misconduct eroded investor confidence, led to employee walkouts, and triggered regulatory scrutiny. The stock price initially plunged after the lawsuit was announced and remained depressed for an extended period.

5. What role did Bobby Kotick play in the stock’s performance?

Bobby Kotick’s leadership was a subject of much debate. While he oversaw periods of significant growth and financial success, his handling of the sexual harassment allegations and his perceived lack of accountability drew heavy criticism. Calls for his resignation or removal intensified as the scandal unfolded, and his continued presence at the helm weighed on investor sentiment.

6. What are the implications of the acquisition for the gaming industry?

The Microsoft acquisition of Activision Blizzard is a major shakeup for the gaming industry. It consolidates significant power in Microsoft’s hands, potentially giving them a competitive advantage in console gaming, PC gaming, and mobile gaming. The acquisition could also lead to increased competition among game developers and platform providers.

7. What is Microsoft planning to do with Activision Blizzard’s game franchises?

Microsoft has indicated that it plans to continue supporting Activision Blizzard’s popular game franchises, including Call of Duty, World of Warcraft, and Overwatch. The company may also explore new ways to monetize these franchises, such as through the Game Pass subscription service or through cloud gaming.

8. Will Activision Blizzard games become exclusive to Xbox platforms?

While Microsoft has stated its commitment to making Call of Duty available on PlayStation platforms, the extent to which Activision Blizzard games will remain multi-platform is still unclear. It is likely that some titles will become exclusive to Xbox and PC to drive subscriptions to Game Pass and bolster the Xbox ecosystem.

9. What were the major regulatory hurdles faced by the acquisition?

The acquisition faced regulatory scrutiny from the FTC, the CMA, and the European Commission. The major concerns revolved around potential antitrust violations and the impact on competition in the gaming market. Regulators worried that the deal could give Microsoft an unfair advantage and harm consumers.

10. How did Microsoft overcome the regulatory hurdles?

Microsoft overcame the regulatory hurdles by making concessions and offering remedies to address the concerns of the regulators. These included licensing agreements for Activision Blizzard games on competing platforms and commitments to maintain fair competition in the cloud gaming market.

11. Is the Activision Blizzard stock still traded on the stock market?

No, the Activision Blizzard stock (ATVI) is no longer traded on the stock market. The stock was delisted from the Nasdaq after the completion of the acquisition by Microsoft in October 2023.

12. What is the future of Activision Blizzard under Microsoft’s ownership?

The future of Activision Blizzard under Microsoft’s ownership is uncertain, but there are reasons to be optimistic. Microsoft has the resources and expertise to invest in Activision Blizzard’s game franchises and revitalize its development pipeline. The company’s focus on inclusivity and ethical business practices could also help to address the cultural issues that plagued Activision Blizzard in the past. It will be interesting to see the direction Microsoft takes the company in the coming years, hopefully for the better for both employees and gamers around the world.