While gaming companies haven’t really made the news much in recent weeks, there’s one noticeable exception. One of the largest gaming giants in the industry, Activision-Blizzard (NASDAQ: ATVI), is continuing to struggle amidst a massive California state lawsuit regarding employee harassment. As the situation continued to escalate into a public relations nightmare, shares have continued to plummet, even amidst what turned out to be a strong quarter for the company. Just recently, Activision Blizzard’s top executive just stepped down from the company.
Allen Brack, president of the company’s Blizzard division, announced he would be stepping down from his long-held position. In an official statement, he said the move was to pursue new opportunities, although that’s almost certainly not the real reason considering what’s going on with these recent lawsuits.
According to the case filed by the state of California, Brack had known full well that employees at his company were leaving due to harassment as far back as 2019. Over 2,000 current and former employees at the gaming giant spoke out in regard to how management has handled the lawsuit allegations.
“With their many years of industry experience and deep commitment to integrity and inclusivity, I am certain Jen and Mike will lead Blizzard with care, compassion and a dedication to excellence,” said Brack in a statement.
Although the lawsuit news continues to remain center stage for the company, a slight silver lining for shareholders came from its Q2 results. Activision Blizzard reported $1.92 billion in quarterly revenue, slightly edging out over the $1.89 billion that most analysts were expecting. Earnings per share (EPS) was also higher, $0.91, versus the $0.75 estimate. Management expects Q3 to see a bit less revenue overall, although still well ahead of Wall Street’s previous estimates.
All of that is good news, but it’s far from enough to shift attention away from what’s going on right now. Activision Blizzard was hit with another lawsuit, this time on behalf of shareholders arguing the company failed to disclose its ongoing problems with employee harassment and discrimination. The lawsuit represents anyone who has traded the stock between August 4th, 2016, and July 27th, 2021. Although these types of lawsuits are quite common among law firms, it’s still another legal issue that the company will have to deal with.
Shares were initially down 3.5% in response to the news, although it seems the stock is starting to make a comeback in pre-market trading. Over the past month, Activision Blizzard lost more than 15.5% of its total market cap. Again, this is mostly due to the ongoing lawsuit, even though that’s only affecting the Blizzard division of the company.
Activision Blizzard Company Profile
Activision Blizzard was formed in 2008 by the merger of Activision, one of the largest console video game publishers, and Blizzard, one of largest PC video game publishers. The combined firm remains one of the world’s largest video game publishers. Activision’s impressive franchise portfolio includes World of Warcraft, which boasts more than $8 billion of lifetime sales, and Call of Duty, which has sold over 175 million copies across 14 titles over 12 years. – Warrior Trading News