Microsoft - A [Bearish] Speculative Analysis (NYSE: MSFT)

Introduction: Welcome back to my weekly stock analysis. Disclaimer: I am invested in this one. I am going to skip through the usual analysis since I think everyone and a half knows about MSFT. What is new is that I plan to discuss my thoughts about the Microsoft acquisition of Activision/Blizzard/King. (Note: I may just call Activision/Blizzard/King as Activision out of a combination of laziness and unnecessary repetition). The Article Microsoft blog post from Brad Smith, President & Vice Chair dated Feb 9, 2022. On a first read, this seems like MSFT is proactively trying to kill 2 birds with 1 stone. The first being a “Hey, we’re not a monopoly, this acquisition doesn't make us one”. The second being “uuh I know about that whole Apple/Epic Games drama. I don't want any of that”. This regulatory process begins while many governments are also moving forward with new laws to promote competition in app markets and beyond. We want regulators and the public to know that as a company, Microsoft is committed to adapting to these new laws, and with these principles, we’re moving to do so. (Paragraph 1) My simple mind translates this roughly to: We see governments cracking down on anti-competition, and we’re ahead of the curve. As for the second point, I need to start with a brief point on the AAPL drama. To put it short, Epic Games violated terms of service, went through a long (and in my opinion silly) trial and put a spotlight on app store policies. Microsoft is getting ahead of the game by saying, you can do and use what you want. We just care about quality, safety, security and data privacy. See: the list of Open App Store Principles. Predicting the Gamer Outrage But too much friction exists today between creators and gamers; app store policies and practices on mobile devices restrict what and how creators can offer games and what and how gamers can play them. Our large investment to acquire Activision Blizzard further strengthens our resolve to remove this friction on behalf of creators and gamers alike. We want to enable world-class content to reach every gamer more easily across every platform. We want to encourage more innovation and investment in content creation and fewer constraints on distribution. Put simply, the world needs open app markets, and this requires open app stores. (Paragraph 5) Translation: Gamers! We live in a society! But, our society has order. Calm down. We want to bring the games to you across our platform. Put your pitchforks down. First, some commentators have asked whether we will continue to make popular content like Activision’s Call of Duty available on competing platforms like Sony’s PlayStation. The obvious concern is that Microsoft could make this title available exclusively on the Xbox console, undermining opportunities for Sony PlayStation users. To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future so that Sony fans can continue to enjoy the games they love. We are also interested in taking similar steps to support Nintendo’s successful platform. We believe this is the right thing for the industry, for gamers and for our business. Translation: There, we said it, no more worry about the discontinuation of your favorite games and series. Go back to playing the games you love. Let us handle it. The Bear Case I need to start this off with 2 disclaimers. First, I am not a lawyer. Second, I am aware that this is a blog post, so word choice may be more lax. So this all seems nice, right? MSFT will keep putting out our favorite games. I ask you to hold your horses on that. To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future so that Sony fans can continue to enjoy the games they love. We are also interested in taking similar steps to support Nintendo’s successful platform. We believe this is the right thing for the industry, for gamers and for our business. Did you catch that? If not, let me make it more clear. To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement… Now I could be reading too far into this, and again, this is a blog post. But what do you mean by available? Sure, available can mean in the same place they have always been. Available can also mean behind 500 confusing prompts. They are still “available”. They can be at the bottom of the PlayStation store. That would still be “available”. They could be upcharge 500%. Massive paywall is still “available”. Final Thoughts: I cannot stress enough that I could be overreaching here. I do not think this is pitchfork worthy. And most likely, the games will be right where they have always been. I do, however, want to put up the “hey wait a minute”, since it’s not often people question the big names. If anyone can turn Activision around, I believe in Microsoft. Side Note: I do want to explain why I don't cover stocks as soon as news comes out. For one, I want to let the news settle and “price in” the news. A week and a half should be plenty of time. For another, there is simply too much news to cover if I wanted to handle every little thing. Sure, I could scale back and only post when big news happens, but I like giving the smaller names a chance to shine. Weekly price estimate for a future date, via consulting the crystal ball: Predicted price for MSFT for Jun 20, 2022: $301.45. There is no factual basis that I will give. I hope someone out there found this post interesting. Please supplement this with your own research. Thank you for reading, please give me feedback so that I can increase my standards for future analysis posts. If I have made a mistake, please correct me. Or if you have one that you want an analysis on, I might pick a comment to do an analysis of if I don't have any spice stored for the week.

back

Microsoft - A [Bearish] Speculative Analysis (NYSE: MSFT)

bullish

Introduction:

Welcome back to my weekly stock analysis. Disclaimer: I am invested in this one.

I am going to skip through the usual analysis since I think everyone and a half knows about MSFT. What is new is that I plan to discuss my thoughts about the Microsoft acquisition of Activision/Blizzard/King. (Note: I may just call Activision/Blizzard/King as Activision out of a combination of laziness and unnecessary repetition).

The Article

Microsoft blog post from Brad Smith, President & Vice Chair dated Feb 9, 2022.

On a first read, this seems like MSFT is proactively trying to kill 2 birds with 1 stone. The first being a “Hey, we're not a monopoly, this acquisition doesn't make us one”. The second being “uuh I know about that whole Apple/Epic Games drama. I don't want any of that”.

This regulatory process begins while many governments are also moving forward with new laws to promote competition in app markets and beyond. We want regulators and the public to know that as a company, Microsoft is committed to adapting to these new laws, and with these principles, we're moving to do so. (Paragraph 1)

My simple mind translates this roughly to: We see governments cracking down on anti-competition, and we're ahead of the curve.

As for the second point, I need to start with a brief point on the AAPL drama. To put it short, Epic Games violated terms of service, went through a long (and in my opinion silly) trial and put a spotlight on app store policies. Microsoft is getting ahead of the game by saying, you can do and use what you want. We just care about quality, safety, security and data privacy. See: the list of Open App Store Principles.

Predicting the Gamer Outrage

But too much friction exists today between creators and gamers; app store policies and practices on mobile devices restrict what and how creators can offer games and what and how gamers can play them. Our large investment to acquire Activision Blizzard further strengthens our resolve to remove this friction on behalf of creators and gamers alike. We want to enable world-class content to reach every gamer more easily across every platform. We want to encourage more innovation and investment in content creation and fewer constraints on distribution. Put simply, the world needs open app markets, and this requires open app stores. (Paragraph 5)

Translation: Gamers! We live in a society! But, our society has order. Calm down. We want to bring the games to you across our platform. Put your pitchforks down.

First, some commentators have asked whether we will continue to make popular content like Activision's Call of Duty available on competing platforms like Sony's PlayStation. The obvious concern is that Microsoft could make this title available exclusively on the Xbox console, undermining opportunities for Sony PlayStation users. To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future so that Sony fans can continue to enjoy the games they love. We are also interested in taking similar steps to support Nintendo's successful platform. We believe this is the right thing for the industry, for gamers and for our business. Translation: There, we said it, no more worry about the discontinuation of your favorite games and series. Go back to playing the games you love. Let us handle it.

The Bear Case

I need to start this off with 2 disclaimers. First, I am not a lawyer. Second, I am aware that this is a blog post, so word choice may be more lax.

So this all seems nice, right? MSFT will keep putting out our favorite games. I ask you to hold your horses on that.

To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future so that Sony fans can continue to enjoy the games they love. We are also interested in taking similar steps to support Nintendo's successful platform. We believe this is the right thing for the industry, for gamers and for our business.

Did you catch that? If not, let me make it more clear.

To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement…

Now I could be reading too far into this, and again, this is a blog post. But what do you mean by available? Sure, available can mean in the same place they have always been. Available can also mean behind 500 confusing prompts. They are still “available”. They can be at the bottom of the PlayStation store. That would still be “available”. They could be upcharge 500%. Massive paywall is still “available”.

Final Thoughts:

I cannot stress enough that I could be overreaching here. I do not think this is pitchfork worthy. And most likely, the games will be right where they have always been. I do, however, want to put up the “hey wait a minute”, since it's not often people question the big names.

If anyone can turn Activision around, I believe in Microsoft.

Side Note:

I do want to explain why I don't cover stocks as soon as news comes out. For one, I want to let the news settle and “price in” the news. A week and a half should be plenty of time. For another, there is simply too much news to cover if I wanted to handle every little thing. Sure, I could scale back and only post when big news happens, but I like giving the smaller names a chance to shine.

Weekly price estimate for a future date, via consulting the crystal ball: Predicted price for MSFT for Jun 20, 2022: $301.45. There is no factual basis that I will give.

I hope someone out there found this post interesting. Please supplement this with your own research.

Thank you for reading, please give me feedback so that I can increase my standards for future analysis posts. If I have made a mistake, please correct me. Or if you have one that you want an analysis on, I might pick a comment to do an analysis of if I don't have any spice stored for the week.

read-time
5 min
301.45
Target Price
7/ 10
Confidence
2-6 Months
Timeframe
catalyst icon
Earnings Release
catalyst icon
News
catalyst icon
SEC
Filing
catalyst icon
Sentiment
catalyst icon
Other Catalyst

Access the latest tools and discussion channels with an account

reddit-sentiment

Reddit Sentiment
Analysis

portfolio-balancer

Portfolio Balancer
with brokerages

sec-dashboard

SEC Dashboard
with NLP

*/}aiodd-ad
next