Culture Wars: California Lawsuit and Related Allegations Cause ~$4B Hit to Activision Blizzard Stock Price
Activision Blizzard is having a rough week. Ever since the State of California filed a lawsuit on July 22 alleging violations of equal pay and fair employment laws amid a 'sexist culture' at the company, Activision Blizzard's stock price has dipped about 6% (from $90 per share to $85). This may not seem like much, but a 6% drop for Activision Blizzard equals $4B of value destruction from the company's market capitalization (the total market value of the company). With no other major news surrounding the company besides this lawsuit and related backlash, the stock drop can be attributed entirely to this singular event.
Source: Google Finance
While Activision Blizzard challenges the framing of the lawsuit, investors are likely pricing in prolonged disruption at the company. Whether the allegations in the World of Warcraft right now".
I don’t know what to do. I don’t have all the answers. I can tell you, almost no work is being done on World of Warcraft right now while this obscenity plays out. And that benefits nobody - not the players, not the developers, not the shareholders.
— Jeff Hamilton 💙 (@JeffAHamilton) July 25, 2021
While these events have created a PR nightmare for Activision Blizzard on social media and gaming forums, it's created a much bigger problem internally at the company as work slows down and employees clash with management over structural changes. An open letter, signed by over 2,600 current employees, demanded 4 major changes at the company:
- The end of forced arbitration for all employees.
- Worker participation in oversight of hiring and promotion policies.
- The need for greater pay transparency to ensure equality.
- Employee selection of a third party to audit HR and other company processes.
Another recent development which adds fuel to the current fire over at Blizzard is a leaked group chat conversation about the "Cosby Room" at Blizzcon in 2013, where Blizzard managers discussed having sex with "hot chix" in a hotel room adorned with Bill Cosby portraits. This drama has also ensnared Greg Street, who at the time worked at Blizzard but currently works at Riot Games.
Sigh. I'm sorry, but time for new leadership. We can't feel safe around people like this. pic.twitter.com/eTEnYhEEO1
— Lindsay Thompson (@Binzimation) July 28, 2021
Past comments by Blizzard executives from over a decade ago are also now being further scrutinized. What's considered "acceptable" has changed a lot over the years and perhaps this clip from Blizzcon 2010 captures it best. Such an exchange in 2021 seems unimaginable:
Oh god, I'd not seen this before. It's heartbreaking.
Here's a 2010 Blizzcon in which a fan was brave enough to ask a full of men, including J. Allen Brack (left) & Alex Afrasiabi (right) whether there's scope for some of WoW's female characters to be less sexualised pic.twitter.com/Elaf3K7KVc
— Chris Bratt (@chrisbratt) July 23, 2021
It's also worth mentioning that while Activision Blizzard stock is down 9.48% year to date, the stock price is up a whopping 105% over the last 5 years. Time will tell whether the current PR nightmare results in more permanent damage at Blizzard, but for now things seem to slowly be getting worse as more and more allegations come to light.
Further reading: Blizzard CEO Response
