Warren Buffett is one of the most successful investors in the world. He’s also the chairman and CEO of Berkshire Hathaway, the American multinational conglomerate holding company that purchased approximately $1 billion in Activision Blizzard stock. What does the billionaire investor like about the Southern California-headquartered video game giant responsible for World of Warcraft and Call of Duty?
Earlier this year, during Berkshire’s annual shareholder meeting in Omaha, Nebraska, Buffett disclosed the company has a 9.5% stake in Activision Blizzard. The stock buys occurred a few weeks before Microsoft announced its intentions to acquire Activision Blizzard for $68.7 billion. “If the deal goes through, we make some money, and if it does not go through, who knows,” Buffett stated at the gathering of shareholders in the Cornhusker State.
Currently, Federal Trade Commission regulators are looking into whether the takeover will hurt competition within the industry. The only good monopoly in gaming is the Hasbro board game that shares the name. However, many take Berkshire Hathaway’s investment as a vote of confidence that the Xbox company will successfully finalize the $95-per-share takeover of the video game empire.
And according to a report released on Oct. 4, 2022, the U.S. Federal Trade Commission could potentially rule on Microsoft’s proposed acquisition of the video game company before the end of November. It got a few steps closer in recent weeks. On Oct. 5, 2022, Brazil’s Administrative Council for Economic Defense (CADE) announced that it had approved the merger. After reviewing the acquisition, the regulatory body had no restrictions. Also, the General Authority for Competition in Saudi Arabia stated “no objection” to the proposed video game industry acquisition, making it the first country to approve the purchase. Kotick has said that the process is “generally moving along as expected” and said he expects it to be complete by June 2023.
The Activision Blizzard CEO stated, “I think the thing that is obvious to me is that when you look at the competition, whether it’s Tencent and NetEase, and Alibaba or Sony, or Amazon, Apple, Google, Facebook, Netflix, then you start looking at like, the second part of competition and content, and you realize whether it’s Roblox or Minecraft, or the variety of other sorts of platforms that are becoming available for content creators, I think there’s more competition than we’ve ever seen for games.”
How Bill Gates Influenced Warren Buffett
Buffett’s biggest investments include Coca-Cola, Kraft Heinz, and Apple. Recently, billionaire Buffett has been looking at more opportunities in the tech sector. His longtime friendship with Microsoft’s co-founder Bill Gates is a significant reason he’s been avoiding tech investments for so long. Gates stepped down from the Berkshire Hathaway board in March 2020. In 2018, Buffett said his firm never acquired shares of Microsoft because it “would be the target of suggestions — or accusations, even — that Gates had told me something or vice versa.”
Activision Blizzard CEO Talks Stock
“I think what affected the stock price more than that is pushing out Overwatch and Diablo. And then I think people started to see that this year’s Call of Duty wasn’t performing as well,” stated Kotick earlier this year. “Stocks go up and down for a variety of reasons. I think our view was that at $95 share with all cash, that’s a really great deal for our shareholders. And so that was an easy and independent judgment. It’s a great deal.”
Others agree. One investor stated, “I stayed with ATVI, the largest holding in my portfolio. And I’m happy I did. In a bear market, you need a return on your capital and not a return on capital. Long and strong on ATVI.” Activision Blizzard is expected to release its Q3 2022 results on Nov. 7.