Activision-Blizzard (NASDAQ:ATVI) is a video game holding company, best known for series like Call of Duty, Warcraft, Guitar Hero, and others. Its shares have dropped 8.2% week-over-week as of mid-afternoon trading on July 30. This has pushed the stock into negative territory for the year-to-date period.
The company has found itself embroiled in a significant controversy in July. On July 22, California’s Department of Fair Employment and Housing filed a civil lawsuit against the company. It alleges that multiple female employees were subjected to gender discrimination, sexual harassment, and unequal pay. Activision-Blizzard said that it is taking the allegations seriously and has launched an internal investigation.
Activision-Blizzard is coming off a first quarter 2021 report that saw it post solid revenues in the face of a very challenging environment. GAAP net revenues came in at $2.27 billion, which beat its original outlook. Activision’s growth was fueled by Call of Duty: Black Ops, Cold War, and Warzone in-game revenues and strong premium sales. Meanwhile, Blizzard’s revenue growth was more muted on the back of strong growth for its Warcraft franchise. It also received a boost from its World of Warcraft Shadowlands expansion.
Shares of Activism-Blizzard possess a price-to-earnings ratio of 28, which puts it in solid value territory relative to industry peers. This recent controversy highlights and ongoing issue in the industry which the company will need to address tactfully in the months ahead.
