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4 Stock Winners and 4 Losers in the Microsoft-Activision Deal

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The video game industry is still buzzing from last week’s announcement that Microsoft (NASDAQ:MSFT) is buying Activision Blizzard (NASDAQ:ATVI). And for investors, the deal means its time to parse out the stock winners and losers in the deal.

Microsoft’s $68.7 billion deal to buy Activision will make it the globe’s third-largest gaming company and the largest game company in the U.S.

After the deal closes, Microsoft will own some of the biggest and best gaming franchises in the world. It will add Call of Duty, Candy Crush, World of Warcraft and others to its already impressive stable that includes Minecraft, The Elder Scrolls and Fallout.

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The deal is expected to close by June 2023, which is the end of Microsoft’s 2023 fiscal year. But it first needs to win approval from the Federal Trade Commission, the Securities and Exchange Commission, the Justice Department and regulators in the European Union.

There’s a long way to go. But the deal should go through.

Who will be the biggest winners and losers from the Microsoft-Activision Blizzard deal? We identify some of them here:

Stock Winners:

  • Activision Blizzard

  • Electronic Arts (NASDAQ:EA)

  • Take-Two Interactive Software (NASDAQ:TTWO)

  • Unity Software (NYSE:U)

Stock Losers:

Stock Winners: Activision Blizzard (ATVI)

Activision Blizzard (ATVI logo on an iPhone with "buy" and "sell" buttons underneath
Activision Blizzard (ATVI logo on an iPhone with "buy" and "sell" buttons underneath

Source: NPS_87 / Shutterstock.com

Maybe it’s too obvious to call ATVI stock a winner in this deal. But I want to highlight it anyway, because there are still profits to be had here — assuming the merger goes off as planned.

Remember, Microsoft is buying the company for $95 per share. ATVI stock was trading in the low $60s when the deal was announced. At this writing, it’s higher at just over $81. That’s still 16% below the price that Microsoft will pay.

And you can’t forget that the Microsoft deal comes at a great time for Activision, which has been kind of an embarrassment as of late. A lawsuit filed last summer in California alleges that women endured daily harassment and abuse while working at ATVI.

Look for Activision Chief Executive Officer (CEO) Bobby Kotick to retire after the deal closes.

Stock Winners: Electronic Arts (EA)

Electronic Arts (EA) logo on a wall
Electronic Arts (EA) logo on a wall

Source: Rick Neves / Shutterstock.com

One interesting thing about the Microsoft-Activision deal is talk of how it will play with the metaverse. Microsoft CEO Satya Nadella brought it up immediately in the purchase announcement:

Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms. We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.