Sam Boughedda

Investing.com — Activision Blizzard Inc (NASDAQ:) shares have extended their recent decline after JPMorgan downgraded the stock based on the recent reports of misconduct allegations against its CEO Bobby Kotick.  

Alexia Quadrani of Activision Blizzard downgraded it to neutral and overweight. The company dropped its target price to $88, from $100. This was due to “continued negative media reports and fresh allegations” which she said gave her cause for concern about its ability to retain talent, hire talent, and deliver on its pipeline.

Quadrani stated that although she is reluctant to downgrade the stock, “recent negative headlines about allegations of sexual misconduct” mean there is “a substantial amount uncertainty.”

California Department of Fair Employment and Housing filed a lawsuit against the company. It claimed that the employees had suffered sexual harassment. Other serious claims were also made. The Wall Street Journal on Tuesday reported that while the CEO was aware of these claims for years, allegations have been made against him.

After the news, Sony’s PlayStation boss Jim Ryan and Activision employees and shareholders criticised the company. Bloomberg reported that Ryan sent an email to employees saying that the company hadn’t done enough to deal with the issue. 

Quadrani informed investors that although the allegations of misconduct remain, the shareholding will still be affected by the overhang. 

“Without resolution these challenges, we do not believe the company’s shares will be able to outperform, and we move to a Neutral rating,” said Quadrani.

Activision shares are down 3.68% so far to $61.84. It trades at levels it has not seen since April 2020.