What happened

Shares of gaming company Activision Blizzard (ATVI) gained 17% in the first half of 2022, according to data provided by S&P Global Market Intelligence. That's a sweet gain considering the S&P 500 fell more than 20% over the same time frame. It's all due to its anticipated acquisition by Microsoft (MSFT 0.89%), which is expected to go close sometime next year.

So what

The digital landscape is shifting, and many companies are changing gears to capture market share in developing categories. Streaming company Netflix, for example, announced its foray into gaming as its lead in streaming narrows. Microsoft is also looking to increase its presence in this space, and acquiring a successful gaming company is one way to do that. In January, Microsoft announced that it will acquire Activision Blizzard for $95 per share, or about a 40% premium above the stock's price at that time, to close in 2023. Shares of Activision jumped on the news. There are limited opportunities where you know you'll gain 40% on your stock purchase in one year.

However, Activision itself hasn't posted strong results recently. If the deal doesn't go through, investors might be left with high-priced shares of a low-performing company. 

Now what

Activision stock was trading at around $67 per share before the company announced the merger, and it soared to $86 right after. It has since declined as investors have been wary of whether the deal is going to happen. Consider what's going on with Twitter. Elon Musk has filed to get out of buying the social media giant, it's countering with a lawsuit to force the buyout, and Twitter shares fell about 10% on the news. At around $37, the stock is trading 37% below the acquisition price of $54.20 per share, or the same price the stock hit after Musk originally disclosed his position in the company in April.

The Microsoft deal looks a lot more secure, but it's understandable that investors will be cautious until the merger gets closer. No less than Warren Buffett picked up some more Activision shares last quarter for Berkshire Hathaway, so there's a vote of confidence from the Oracle of Omaha.

Plus, sales growth is likely to return as Activision releases new games, which is the reason Microsoft is interested in it to begin with. This could be a risky play, but it could have a happy ending.