Shares of Activision Blizzard (NASDAQ:ATVI) were already trending lower through most of July on expectations for weak financial results that would be going up against strong pandemic-driven gains a year ago.
But the video game maker's stock plunged, ending the month down 12.4%, according to data provided by S&P Global Market Intelligence, when news broke that the company had been accused of creating a hostile work environment.
Because of COVID-19 locking everyone in their homes for the better part of the year last year, video game sales soared and Activision Blizzard's revenue jumped nearly 20% over the year before, which had been a down year for the game maker.
Sales had tumbled over 12% in 2019, but last year's rebound put it well over 2018's level. So expecting Activision to have a repeat performance this year was likely a bit too much and by the end of June the game maker's stock was up less than 3% year to date.
With earnings due out Aug. 3, the stock began heading lower, and at the end of July, when the California Department of Fair Employment and Housing announced it was suing Activision for discrimination and sexual harassment, the bottom fell out on its shares. That was followed by work stoppages on its major game franchises, employees going out on a one-day strike, and fans calling for a boycott.
Into the maelstrom came an email from executive vice president for corporate affairs, corporate secretary, and chief compliance officer Frances Townsend that created a whole new brouhaha as she called the allegations "factually incorrect, old and out of context."
Activision Blizzard issued a statement saying the state's suit included "distorted, and in many cases false descriptions of Blizzard's past."
The video game company released its earnings after the market closed Tuesday, and though they beat analyst expectations, guidance for the rest of the year was more muted, sending the stock even lower.
With many businesses now operating at full capacity, consumers are heading out of their homes, meaning there is less gameplay coming. While Activision Blizzard raised its full-year revenue forecast from $8.6 billion to $8.65 billion, Wall Street had been looking for $8.77 billion, suggesting there may be a bit of a mire the company needs to slog through.