Why Activision Blizzard Stock Dropped 4% Today


What happened

Shares of video game giant Activision Blizzard (NASDAQ:ATVI) are slumping 4% as of 2:55 p.m. EDT Tuesday, after the company announced a change in management.

This morning, Activision President Daniel Alegre said he was “pleased to announce” that development executive vice president Jen Oneal and platform and technology executive vice president Mike Ybarra have been appointed “co-leaders of Blizzard,” replacing that division’s current president, J. Allen Brack.  

Person playing video game.

Image source: Getty Images.

So what

It was a short announcement, heavy on relating Oneal and Ybarra’s respective qualifications, but light on specifics for why Brack is leaving the company. Fortunately, other media filled in the blanks for us.

Variety, for example, points out today that just two weeks ago, the California Department of Fair Employment and Housing filed suit against Activision Blizzard alleging that the division led by Brack has a “pervasive frat boy workplace culture,” in which women are subject to workplace harassment and paid less than men. 

According to the suit, Brack and other company executives were aware of these issues but “failed to take effective remedial measures in response to these complaints.”

Now what

As if that weren’t bad enough, last week some 1,500 Blizzard employees staged a walkout to protest the same issues raised by the lawsuit.

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Fighting a two-front war against both the state and its own employees apparently didn’t appeal to Activision Blizzard, and so today, the company moved to end the crisis by replacing Brack. Investors don’t seem pleased by this development, but honestly, given how quickly the crisis was spiraling, I don’t believe Activision Blizzard had much choice. In fact, management’s decisive move may turn out to be the best thing for the company in the long run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.




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