Friday's Headlines: Microsoft Set For Legal Battle Over Activision Acquisition
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Yext (YEXT) +4.1%
Core & Main (CNM) +3.5%
Axos Financial (AX) +1.9%
Trip.com Group (TCOM) +1.3%
Moving Down ⬇️
Redfin (RDFN) -9.6%
Roku Inc. (ROKU) -9.3%
Stitch Fix (SFIX) -8.9%
Farfetch (FTCH) -7.4%
Bumble (BMBL) -6.9%
Microsoft Set For Legal Battle Over Activision Acquisition 👨⚖️
In a huge blow to Microsoft’s (MSFT) future aspirations in the gaming sector, news has emerged that the FTC has filed a legal challenge against the Big Tech firm’s purchase of Activision Blizzard. The $68.7 billion deal, which was initially announced in January of this year, has drawn the ire of regulators as it would supposedly grant Microsoft an unfair advantage with regard to console sales and cloud gaming.
Holly Veldova, The director of the bureau of competition at the FTC, stated that “today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.” Further explanation was offered into the reasoning behind the legal challenge in a release made by the FTC:
“With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers,”
Microsoft has been adamant that it is willing to comply with regulations and has already previously proposed concessions to the FTC regarding the deal as recently as this week. Activision also remains assured that the deal will go through, with CEO Bobby Kotick expressing that conviction in an internal memo to staff yesterday.
DocuSign Shines as Earnings Deliver 📝
DocuSign (DOCU) has seen its stock rise rapidly premarket following the release of its highly-anticipated third-quarter earnings yesterday after the bell. The company — a provider of electronic signature technology and management services — is currently up over 12% ahead of market open as investors respond to its outperformance.
DocuSign posted adjusted earnings per share (EPS) of $0.57 on revenue of $646 million. Despite earnings actually sliding by one cent from the year-ago quarter, these figures still bested analyst predictions of $0.42 per share and $627 million respectively. CEO Allan Thygesen spoke about the current strength of the company, but also addressed its lagging performance this year-to-date following a bountiful period of growth during the pandemic.
“We didn’t fully address the changing market dynamics nor mature our operations and systems sufficiently. We understand those gaps, and we’re committed to moving forward with more transparency. I think the good news is that the future is in our own hands.”
DocuSign is currently down over 72% year-to-date ahead of market open today, and sits almost 86% off all-time highs witnessed during late 2021 when the COVID-19 pandemic had the world firmly gripped in its clutches.
Lululemon Beats Expectations but Softens Q4 Guidance 🤸♀️
On Thursday, Lululemon topped sales and profit expectations for its third quarter but disappointed Wall Street with its conservative guidance for the rest of the year.
Lulu had revenue of $1.86 billion versus $1.81 billion expected while net income was $255.5 million compared to $187.8 million anticipated. Total same-store sales rose 22% during the period which also defied analysts’ projections of 19%.
According to CEO Calvin McDonald, early holiday shopping has been incredibly successful — Black Friday was the company’s biggest-ever day for sales and store traffic. However, McDonalds also acknowledged the unpredictable shopping climate stating: “the external environment remains challenging with several high-volume weeks still in front of us.”
Lulu’s fourth-quarter guidance was just below analysts’ hopes. The leggings maker expects earnings per share of $4.20 to $4.30, compared to projections of $4.30, while revenue will be between $2.605 billion to $2.655 billion, versus a projected $2.649 billion.
However, full-year projections have been raised thanks to Lulu’s consistent outperformance during the year. Management expects revenue between $7.944 billion to $7.994 billion, up from its previous forecast of between $7.865 billion and $7.940 billion.
Investors are clearly hypersensitive to any kind of conservative guidance as Lulu’s stock has fallen more than 7% on the news.