Activision’s (ATVI) buyout price of $95 sounds too good to be true. The gaming giant is struggling to trade at anywhere near the price Microsoft (MSFT) is offering.
Last week the Federal Trade Commission (FTC) said that it would proceed with suing to block the deal. If the FTC succeeds in stopping the deal, it is a blessing for Microsoft. The firm offered a generous $69 billion for Activision. The Call of Duty franchise is a guaranteed hit for the gaming sector but consumers may cut back on spending.
Inflation is hurting disposable income levels. Already, PC sales are down as consumers delay PC gaming upgrades. Still, demand for consoles remains strong. Investors could buy Sony (SONY) instead, betting that the popularity of PS5 will continue in 2023.
When Amazon (AMZN) proposed to buy iRobot (IRBT) for $61 a share or $1.7 billion, IRBT stock peaked at $60. The stock slipped steadily on worries that the deal raises concerns. Regulators could question data privacy risks and lower competition.
iRobot’s discount to the buyout price is small. The robot vacuum product is a niche market. Consider betting that the government will let Amazon proceed with the deal.
