Activision Blizzard’s Diablo IV has soared to new heights, becoming the fastest-selling game in the company’s history and generating over $666 million in sales within its first week. However, amidst this success, the game publisher is facing a crucial legal battle as the U.S. Federal Trade Commission (FTC) has sued to block Microsoft’s acquisition of Activision Blizzard. A decision is expected in July, which will greatly impact the future of the gaming industry and other major players like Electronic Arts and Take-Two Interactive Software.
Key Points
1. Diablo IV’s success: Diablo IV became the fastest-selling game in Blizzard’s history, generating over $666 million in sales within the first five days of its release. This achievement highlights the immense popularity and demand for the game among players.
2. Microsoft’s acquisition offer: Microsoft offered to acquire Activision Blizzard in an all-cash deal, valuing the company at $68.7 billion, or $95 per share. The offer has faced opposition from the FTC, leading to a pending regulatory approval process with a hearing scheduled for late June 2023 and a ruling expected in July 2023.
3. FTC lawsuit and impact on the merger: The U.S. Federal Trade Commission (FTC) has sued to block the Microsoft-Activision Blizzard merger, citing concerns about anti-competitive practices. The outcome of the FTC lawsuit will heavily influence the fate of the acquisition and have significant implications for the video game industry as a whole.
Diablo IV, the latest game released by Blizzard, has achieved record-breaking sales, surpassing $666 million within the first five days. This makes it the fastest-selling game in Blizzard’s history. The success of Diablo IV has sparked interest in Activision Blizzard’s stock, despite an ongoing lawsuit with the U.S. Federal Trade Commission (FTC) regarding its merger with Microsoft.
Microsoft offered to acquire Activision Blizzard in an all-cash deal at $95 per share, valuing the company at $68.7 billion. The European Commission approved the takeover on May 15, 2023. However, the FTC has filed a lawsuit to block the transaction, causing the deal to be pending regulatory approval. A hearing is scheduled for late June 2023, with a ruling expected in July 2023. The merger has a termination date of July 18, 2023, with a $3 billion termination fee for Microsoft if the deal does not go through.
The success of Diablo IV aligns with the ongoing FTC court hearing to determine the fate of Microsoft’s acquisition of Activision Blizzard. The trial will take place in late June, and a decision is expected in July. The outcome of this decision will have significant implications for other major video game publishers, including Electronic Arts and Take-Two Interactive Software.
Microsoft’s acquisition offer was made on January 24, 2022, at $95 per share, totaling $68.7 billion. While the European Union approved the merger, the FTC opposes it, citing concerns about the potential harm to competition in the video game industry. Microsoft’s ownership of Xbox could lead to exclusivity deals, forcing consumers to purchase an Xbox to play certain games. Microsoft argues that the industry is already competitive and that the merger would not harm competition.
The merger would make Microsoft the third largest video game publisher and give them ownership of popular franchises such as Call of Duty, World of Warcraft, and Diablo. Sony, the maker of PlayStation, has faced similar accusations of anti-competitive practices. The European Commission has launched an investigation into these allegations.
Based on the success of Diablo IV, analysts have upgraded their price targets for Activision Blizzard. Baird raised their target to $90, while Colin Sebastian increased bookings estimates and earnings per share. However, the future of Activision Blizzard’s stock depends on the outcome of the FTC court case, with potential for the acquisition price to reach $95.00 if approved. If the deal falls through, the stock could see a lower market structure low trigger area at $61.70.
The weekly candlestick chart reflects the uncertainty surrounding the merger, with the stock trading within a symmetrical triangle pattern. The range has been tightening, indicating an impending resolution. Support levels are identified at $76.60, $73.61, $70.94, and $67.41, with a potential buying opportunity at $61.70 if the deal does not go through.
While Activision Blizzard currently has a “Buy” rating among analysts, there are five other stocks that top-rated analysts believe are better buys. These stocks have been identified by AlphaBetaStock.comas potential investments before the broader market catches on.
Overall, the fate of Activision Blizzard’s stock lies in the hands of the FTC court ruling, expected in mid to late July. The outcome will have significant implications for the gaming industry and could shape the future of major players like Microsoft and Sony.
