US Tech stocks have been taking a considerable battering lately.
Throughout January, the NASDAQ Composite Index, which is a top-tier index comprising many of the big-cap tech stocks, has been floundering.
This is an unusual direction, largely because there is nowadays very little volatility in the stock of internet giants Facebook, Google and Amazon, along with their peers in the big tech arena Apple and Tesla.
Recently, even Microsoft has taken a dip in value, however this time it has perhaps more to do with Microsoft’s own internal matters and recent business decisions than a general downturn in the performance of or appetite for tech stocks.
Yesterday, midway through the US trading session, Micrsoft stock reached a 5-day low, trading at $292.29 at 14.00 EST.
This low point took place at approximately the same time that news was released relating to Warren Buffett, CEO of Berkshire Hathaway and one of the world’s most highly respected investors, had bought a $1 billion stake in video game producer Activision Blizzard during the company’s fourth reporting quarter just before Microsoft acquired the company for $68 billion.
A regulatory filing, highlighted by many American news channels yesterday, shows that by the end of 2021, Berkshire Hathaway had increased its ownership of shares to 14.66 million, valued at $975 million as of the end of last year.
Just two weeks before that was reported, Microsoft made its announcement that it was preparing to acquire Activision Blizzard, which caused Microsoft shares to rise significantly.
It is now anticipated that Warren Buffett Buffett is likely to make a generous profit should the deal close between Microsoft and Activision Blizzard, however it is interesting to note that Microsoft shares went down in value on the publication of this news.
Microsoft CEO Satya Nadella spoke to the financial press two weeks ago, citing the potential deal as a massive step forward for Microsoft as it would be an instrumental move toward Microsoft’s entry into the ‘Metaverse’, which is part of the ‘Web 3.0’ development being taken by internet and computing giants in which a virtual-reality space is created within which users can interact with a computer-generated environment and other users.
At the end of December, Warren Buffett’s purchase was worth $975 million, however at today’s values it has increased to approximately $1.2 billion, showing that interest in Activision Blizzard stock is high among investors, however Microsoft’s performance yesterday is an absolute mirror image of that.
Perhaps speculation is widespread among conservative investors in Microsoft stock, as the move toward increasing its presence in the new ‘metaverse’ arena as well as being involved in a gaming company, albeit an established one which has titles such as World of Warcraft to its name, brings in a different dimension as Microsoft is a stable, old-school big cap, big tech stock, whereas many gaming firms are regarded as ‘meme stocks’ by online communities and are easily influenced.
For that reason, many brokerages, including FXOpen, do not offer trading in Activision Blizzard stock, despite it being listed on the NASDAQ exchange.
The marriage between the two companies is therefore an interesting move for Microsoft more than it is for Activision Blizzard which has everything to gain, and has Warren Buffett as a major investor behind it.
For certain, almost all of the attention will be on how Microsoft investors handle this transaction as it nears closure, and what it will likely do to influence the stock of one of the world’s oldest tech firms once they become an item.