By Sam Boughedda
Investing.com — Activision Blizzard Inc (NASDAQ:ATVI) shares have extended their recent decline after JPMorgan downgraded the stock based on the recent reports of misconduct allegations against its CEO Bobby Kotick.
Analyst Alexia Quadrani downgraded Activision Blizzard to neutral from overweight, dropping its price target to $88 from $100, saying that the "continued negative press reports and fresh allegations also gives us pause on the company's ability to hire/retain talent and execute on its pipeline."
Quadrani added that she was she was "reluctant to downgrade" the stock, but "recent negative headlines" about sexual-misconduct allegations means there is "a significant amount of uncertainty."
In July, the company was sued by the California Department of Fair Employment and Housing, alleging that employees experienced sexual harassment, while there have also been other more serious allegations. The Wall Street Journal reported on Tuesday that the company's CEO knew about the allegations for years, while there have been allegations made against the CEO himself.
Following the report, Sony's) PlayStation boss Jim Ryan as well as Activision employees and shareholders criticized the company. Ryan said in an email to his employees, as reported by Bloomberg, that the company has not done enough to address the issues.
Quadrani told investors that while the misconduct allegations remain, there will be an overhang on the shares.
"Without resolution these challenges, we do not believe the company’s shares will be able to outperform, and we move to a Neutral rating," said Quadrani.
Activision shares have so far declined 3.68% to $61.84. It is currently trading at levels not seen since April 2020.