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.
Activision Blizzard Inc. shares were trading at $40.55 per share on Monday afternoon, down $2.86 (-6.59%). Year-to-date, ATVI has declined -12.93%, versus a 8.37% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Schaeffer’s Investment Research.