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After Bungie Divorce, Activision Loses Wall Street’s Love

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Jan. 11 2019, Updated 10:29 a.m. ET

Bungie

On January 10, in a regulatory filing, Activision Blizzard (ATVI) announced that Bungie will “assume full publishing rights and responsibilities for the Destiny franchise. Going forward, Bungie will own and develop the franchise.” Activision Blizzard said, “As a result, the company does not expect to recognize material revenue, operating income or operating loss from the Destiny franchise in 2019.”

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Wall Street analysts

Activision Blizzard opened sharply lower on January 11. As of 9:40 AM EST, Activision Blizzard has fallen 11.8%. Electronic Arts (EA) has fallen 0.86%, while the S&P 500 (SPY) has fallen 0.51%. Analysts turned bearish on Activision after the news. MKM Partners lowered Activision Blizzard’s fair value from $68 to $48. Benchmark lowered the stock’s target price from $93 to $87. On January 9, SunTrust Robinson lowered Electronic Arts’ target price from $116 to $105. The brokerage also lowered Activision Blizzard’s target price from $65 to $62.

Other news

On January 10, Reuters reported that Blizzard Entertainment and NetEase extended their partnership in Mainland China. The 11-year partnership has been extended another four years. Earlier this year, Netflix (NFLX) hired Activision Blizzard’s ex-CFO Spencer Neumann. The gaming market in China has been rattled by slow progress on new game approvals. While China has approved games in two batches over the last two weeks, there weren’t any games from Tencent (TCEHY).

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