Activision stock is down on layoff reports expected to affect hundreds of employees
The shares of Activision Blizzard, Inc. (NASDAQ:ATVI) are down 5% at $41.23 in early market trading after Bloomberg reported that the video game giant is planning on announcing a round of layoffs. The cuts -- which could potentially affect hundreds of employees -- are a response to a slowdown in sales and an attempt to restructure. ATVI already touched a two-year low of $41.19.
Since its post-earnings bear gap on Nov. 9, the shares of the "Call of Duty" maker have failed to gain any type of momentum. The equity was neatly contained by its 50-day moving average during its most recent breakout attempt, and has moved below the formerly support $45 level.
Analysts are already responding to the bad news, with Benchmark dramatically cutting its price target to $68 from $87. Activision could be vulnerable to more downgrades, too. Currently the security holds 15 "strong buy" ratings, two "buys," five "holds," and not a single "sell." Plus, the consensus 12-month target price of $59.18 holds a roughly 44% premium to current levels.
Traders remain optimistic in the options pits too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ATVI's 10-day call/put ratio of 5.45 stands in the 99th percentile of its annual range. This means more than five calls were bought to open for every put.