Activision Blizzard (NASDAQ:ATVI)
With the game developer’s $69 billion sale to Microsoft (NASDAQ:MSFT) seen as “very” likely to be completed within the next six months, Activision Blizzard (NASDAQ:ATVI) has been added to Wedbush’s Best Ideas List.
Wedbush analyst Michael Pachter said that Microsoft (MSFT) will offer explicit promises about the availability of Activision material, such as having “Call of Duty” accessible on Sony’s (SONY) Playstation for the next decade.
Following a Politico article from last Wednesday that the FTC might sue to prevent the $95/share Activision sale, Wedbush has recommended against the transaction. Reuters reported on Monday that Microsoft (MSFT) is planning to provide concessions to the European Union in the near future to allay concerns about its proposed acquisition of Activision. A 10-year license agreement between Microsoft and Sony is in the works (SONY).
Pachter pointed out that even after merging, Activision and Microsoft will control just around 10% of the global video game business, far behind the likes of Tencent (OTCPK:TCEHY) and Sony (SONY).
According to Pachter’s analysis, “We believe that there are legal difficulties in the U.S., U.K., and EU. most likely not develop formally” and much less likely to succeed if they do.
Pachter believes Activision stock will ultimately reach his $95 price objective owing to the company’s “great earnings potential” and sizeable net cash balance, even if the acquisition doesn’t go through.
Pachter stated, “Simply put, Activision Blizzard is developing games faster than its big competitors after the COVID-19 slowdown, has a promising 2022–2023 release schedule, and is soon to be acquired at $95 per share with little chance of the deal falling through, in our opinion.”
Following Monday’s upgrades from Morgan Stanley, Wells Fargo, and Truist, in which those firms argued that Activision stock was undervalued due to the absence of any impact from the rumored Microsoft (MSFT) merger, Wedbush chimed in with its own assessment that the company was overvalued.
According to Dealreporter’s story from this past Wednesday, the Federal Trade Commission is scheduled to make a recommendation on the Activision (ATVI) merger by mid-December, with a final judgment coming in January.
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Author Shariq Khan 
