Why Is Activision Blizzard Stock Down?

Activision Blizzard (NASDAQ: ATVI) is under fire following claims that management has failed to address ongoing issues of sexual harassment and unfair pay, and The Wall Street Journal has taken to the printing press to make employees’ voices heard. 

So what’s going on exactly?

At the center point of this firestorm is CEO Bobby Kotick, with some calling on the lead man to resign. Apparently, Kotick was made aware of ongoing issues within the business but failed to bring these details to the attention of the company’s board of directors. 

In a recent video interview addressing employees, he underpinned his:

“conviction to be the most welcoming, inclusive workplace” 

But there are still doubters, and with good reason. Kotick himself has been accused of the mistreatment of women within, and outside of the workplace, and it has been said he has made sure to deal with these issues below ground, so as not to bring unwanted attention.

Management’s stance

Activision’s board of directors “remains confident” that issues were “appropriately addressed” by the CEO when brought to his attention, however, how much this changes the matter is unclear.

The board has clearly failed to address employee concerns, focusing on their own troubles rather than that of their employees, who seem to be losing faith in the business. Whether or not the claims hold true, this news brings light to a toxic, or at the very least, unsatisfactory work environment for many employees — much more than a few misdemeanors. 

This isn’t the first time management has been on a hit-list either. Back in 2019, a lawsuit alleged that employees were deciding to leave the company, again,  based on problems relating to sexual harassment. Another lawsuit filed in July of this year by the California Department of Fair Employment and Housing was along the same lines, and an Activision president left not long after. 

Where does Activision go from here?

This disruption doesn’t mean that the general public will stop buying games from its ‘Call of Duty’ and ‘World of Warcraft’ franchises, but it does need to do more to address these concerns. A toxic work environment can be detrimental to a business’s success, as it becomes natural to fall back into bad habits built over years. The long-term effects will mean that the company will find it difficult to attract and retain the best talent in its industry, and it could slowly lose any competitive edge it once had.

Change management comes from the top-down so it will have to start with upper management taking a lead to incorporate action plans and strategies to help repair the damage that has been done and show employees that their safety and vocalizations matter. 
Strong company culture is of the utmost importance in any industry, and in fact, it should be at the forefront of any investor’s research process as it can lead to outperforming investment returns, so it’s positive on all accounts.

If you want to learn more about the effects of company culture on returns, and the free resources you can use to research any company’s management before investing, check out this article from MyWallSt’s Chief Investor and Co-Founder, Emmet Savage.