So it may fall because Microsoft will pay more than its worth? I don't think they are concerned about that.
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Microsoft to acquire Activision Blizzard
- Thread starter Kawngi
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I think the common thinking is that it may fail due to government intervention. Investors are trading below the possible sale share price as a result.
Or, maybe people are banking on that payout.
Why on Earth would anyone panic and sell off right now?
Why do that before a shareholder vote?
Why do anything when regulators have not shown any bite despite the noise they always make?
You sit on the shares. In fact, it is expected that if investors are expecting a payout from Microsoft, they would be sitting on their shares. If they doubt that the deal would go through, they would be dumping the shares and we would see a sell off because this is what happens when people do not see value in a stock. Examples would be your Covid stocks like Peloton, Zoom etc.
Those are the basics.
This is not the Nvidia - ARM merger. Microsoft sees an opportunity, and maybe they may not want a fight, but this analysis that Activision Blizzard stock not selling higher is a mistake is bottom of the barrel analysis.
If you want to bet the deal will pass simply buy Activision. If you want to leverage your bet, with the risk to lose all your investment, buy options.
If this deal were ever to fall through, Activision stock would fall in the short to maybe medium term.
I…have no idea what you're arguing. That last sentence doesn't make any sense, and the rest of your post doesn't really seem to actually address anything i'm saying either.
The stock has been burning off some value since the announcement, and it never got as close to the buyout price as one might expect. It also doesn't really make sense for the stock to go much lower than it is now, as it's only back at what it was…in November. The stock is up ~$10 from where it was before the announcement, and ~$20 down from the offer price. It the market was sure of the deal, it would be closer to the offer, as that's guaranteed money and a solid hedge against inflation.
Did I say that? Read my post again, don't twist words. And chill!
I said:
1. Jason isn't the type to fish for clicks
2. There are other stories that will generate more clicks than this one
This deal probably has a 95% chance of happening but it doesn't mean what he wrote is wrong.
Couldn't the shares trading 25% below also be related to their recent earnings report where they stated they had 50M fewer MAUs year-on year? That seems, to my ignorant self, to be the more obvious reason why shares would go down in value right now.
If you are "sure" the deal will go through, nothing from the earnings report matters at all. The deal is locked at $95 dollars per share.
Are you not making my point though?
Microsoft cash is guaranteed money. Anyone who held that stock on January 14th is looking to make a 43% or so return next year.
Any one that bought it at its high of $82 is looking at a payday of 25% or so.
There is guaranteed pay if this deal goes through. Why would anyone sell for less than that seeing that there is:
1) Inflation.
2) The fed talking rate hikes.
3) Some politicians already talking about the need to ramp up rates at a faster clip to tackle inflation.
In any of these cases, the stock market takes a beating.
Was the stock expected to trend lower? Yes! You had the initial rush about the acquisition, but in the days that followed that flurry settled down. The issues that this company needs to solve are still there, they under performed, and there is talk that they do not want Call of Duty releasing each year because they have seen some cannibalization.
Why Earth would this stock be trending up? Why would current shareholders settle for a piece of the cake when they have all of it?
There are other ways institutional investors look at investing than simply 'we will make 19 dollars a share in 18 months if this goes through.' They would likely evaluate the gain, vs the chance of it happening (actually the risk of it not happening), vs how long it will take before the deal is signed (since their money is locked up for that time), vs all of the other potential places they could put their money, vs a ton other vectors.
In this case, an institution might say something like 'waiting 18 months for $19 a share with a 95% chance of it going through (and potentially a huge loss if the 5% happens) is a worse investment than putting that money in some other stock.'
In this case, an institution might say something like 'waiting 18 months for $19 a share with a 95% chance of it going through (and potentially a huge loss if the 5% happens) is a worse investment than putting that money in some other stock.'
…are you trying to argue that the stock price is where it's at because no one wants to sell? Because if so, that's just absolutely not true.
Again, don't post Hoeg Law
Interesting, I hope it goes through so by this time next year we can have a Microsoft Bethesda and Activision conference.
Makes sense!
Wow, didn't know about this rule. My bad!
The argument is the stock is 25% below the offer price because the market believes there is a reasonable chance that the deal will not go through, most likely because of regulator actions.
It probably won't, but if it does, I don't have high hopes for Activision. I can't see big changes happening for employees and the products and the board/shareholders will just start looking for other offers. It will be a downward spiral.
The stock in this scenario is like a Las Vegas sports book. Its not the reason this deal might fall through, its an indicator that people believe the deal might fall through.
this seems right to me. But is 18 months such a long time for institutional investors?
the thought process is that the price is going down because investors are selling off stock to reduce losses if the stock tumbles due to the sale failing.
If the investors were confident they would do what you suggested and sit on the shares and value of the said shares wouldn't have decreased.
I'm no expert but what I just mentioned and what others have mentioned makes sense to me. I have no clue if the deal will fail and actually decided to take a gamble on the deal clearing by purchasing some stock. If I am wrong well I'm going to be looking at a loss that the market seems to be looking to avoid right now.
This. With their recent financials, loss of MAU, and a 2023 COD delay, it'll sink like a stone initially and stay down for a while.
Sorry, I just made up a date. I don't have any real idea of how long it will take. And 18 months is not necessarily a long time. But they would take that into account against a 25% return. Someone might think Apple is undervalued, and it will do way better than 25% over 18 months (or whatever time frame), making that investment a better use of their money. At least that's my sense of it all.
I see, thanks. Didn't realise the price had been dropping. Seems a bit of a weird gamble to sell.
This might be unpopular, but if it stops a corporate consolidation war, then I hope it does. I also want Blizzard's unscrupulous employees get the boot, whether that's from the company going under or Microsoft cleaning house.
Edit: Nevermind, it was approved.
You are putting words in my mouth.
Everything has a price. But:
1. What is the incentive to sell if you got it post 18th January 2022?
2. Say you had it below $65, and it is now at $76. Why sell now for a $11 profit and not wait another year for an extra $21 a share minimum?
The only reasons you do that are:
1. You really need the money.
2. You think you can make better returns elsewhere.
There is always someone willing to sell, but the price has to be right. The people who own those shares and those that want in are solely looking at the $95 price.
Remember this stock market became inflated because people and companies could borrow cheap to gamble on stocks, or participate in the share buy back craze. It is still a margin business.
Again, the issues about the horrible workplace is not going away.
They have had issues with Call of Duty, even stating that they will not have a game out this year. This is not only going to mean that they have an earnings hit this quarter, but earnings will lag what they had anticipated.
If this were trading normally, the stock would be far lower than it is today, and that is what people are not telling us.
1. Activision has workplace issues, and those are going to take time and money to solve. They still need to navigate legal challenges.
2. The company has under-performed, and it will under-perform the rest of this year too and sure to under year over year next year. There is decreased engagement and no Call of Duty this year.
3. The only reason we saw a spike in share price at the start of the year was the leadership at Activision Blizzard King striking a deal to sell to Microsoft. The stock was at $65 and change and would be trading much lower than that given all the issues in play.
The only reason this stock is in the mid to high $70's is investors waiting for that payday. Should this deal fall through for one reason or another, this stock is tanking hard.
However, we live in a world where people do not know what organic growth is, cannot explain what a monopoly is or why anti-trust laws are in play. We similarly live in a world where most people cannot analyze the stock market. I gave two companies that had their stocks crater i.e. Zoom and Peloton; that is what a lack of trust in a company looks like.
I mean, you can easily check if the stock is being sold or not...
I understand where you are coming from but I don't think you are correct at all.
And you are contradicting yourself in your posts.
"The only reason this stock is in the mid to high $70's is investors waiting for that payday. Should this deal fall through for one reason or another, this stock is tanking hard."
This is the exact reason why people would be selling. It's a risk vs reward game. Even those that bought it cheap might think it's smart to cash out now before the deal crashes and they lose their profit.
If people believed this deal would go through, they would be buying more and more shares (since it's free money). Since people DON'T believe it will go through, it's at the current price. Some people are selling because they are risk adverse and not enough people are trusting the deal to go through to make the price go up.
Ok, so you don't seem to understand what we're actually talking about. The reason the stock isn't higher is, in no way, shape, or form, because people are unwilling to sell shares. You can absolutely buy shares. Go ahead and do it right now, I bought $100k worth recently. If no one was willing to sell, the share price would be much closer to $95.
The share price is at $76 because enough people aren't willing to BUY shares, because the market isn't completely convinced the deal will go through and new investors don't see this as a sure fire bet to get a 25% return.
All your other talk about the company, about workplace issues, etc. aren't germane to this discussion. None of those things matter if the market is sure the sale will go through.
That was just stock holders, it still needs FTC approval
are we at the point where we can stop pumping up Schreier's tweets, beyond him retroactively reporting on things he "left out of reports last year" when other people break stories and trying to co-opt them as his own without giving credit, knowing that the masses will only source him, we also have him doing shit like this where he is fanning flames for clicks for Bloomberg numbers when the shear concept he is even talking about would be market manipulation.
How is it market manipulation? He's merely pointing out that the share price is below what Microsoft offered to pay per share. His assessment is entirely correct and factual, as anybody can publicly see. Are you insinuating he's trying to pump the stock price? lol
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