- MSFT gains 8% in Wednesday premarket.
- Microsoft reported FQ3 earnings ahead of Wall Street consensus late Tuesday.
- UK's CMA says Microsoft's acquisition of Activision would create too much power in cloud gaming.
- NASDAQ 100 futures rise 0.6%.
Microsoft (MSFT) stock has a second reason to advance higher on Wednesday as a UK regulator moved to block its $69 billion acquisition of Activision Blizzard (ATVI). The UK's Competition & Markets Authority (CMA) said that the merger would give Microsoft too much market share in the cloud gaming realm.
MSFT stock has shot up 8.1% to $297.82 in Wednesday's premarket. The entire futures market is bounding ahead on Wednesday following both Microsoft's and Alphabet's (GOOGL) positive earnings beat late Tuesday. NASDAQ 100 futures are ahead 0.6%, while the S&P 500 and the Dow have advanced more gingerly.
Microsoft stock news
Microsoft management said it would appeal the CMA's ruling, but shareholders seemed enthused – maybe because the $69 billion price tag was viewed as a bit expensive. The CMA said that Microsoft already controlled more than 60% of the cloud gaming market due to its ownership of the Windows operating system, the XBox gaming console, XCloud and the Azure cloud platform.
"We have therefore concluded that combining Activision’s strong portfolio of games with Microsoft’s current multiple cloud gaming strengths would enable Microsoft to harm current and emerging cloud gaming competitors by withholding Activision games from them and, unlike in the case of consoles, we have not found that there are any material reasons to stop it doing this," the CMA decision said.
Sony (SONY), thought to be the major loser if the Activision acquisition was approved, saw its share price shoot up 3% on the news. Meanwhile, Activision stock fell 9.6%.
"The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom," said Microsoft President Brad Smith. "We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works."
The US Federal Trade Commission (FTC) has already sued to stop the buyout, and the EU regulator has until June to make its decision on the matter public. Microsoft, however, seems keen to appeal every adverse regulatory decision in its way, and this saga will likely carry on for quite awhile.
Late Tuesday Microsoft reported adjusted earnings per share for the quarter ending in March of $2.45, which bested Wall Street analyst consensus by 22 cents, on revenue of $52.86 billion, which was $1.85 billion ahead of the average forecast.
Microsoft stock forecast
Microsoft stock has leapt above the $294 handle, which was keep the shares in line in Tuesday's post-market. MSFT stock is advancing about twice as much in Wednesday's premarket as Tuesday's post-market, and share are now closing in on $298. As we said in our earnings coverage, a break above the $294 resistance level should give bulls access to $315. The RSI is neutral at best, so there is no reason to view MSFT stock as overbought yet. Traders will most likely take profits at $315, which represents a swing high from March and April of last year.
MSFT daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0550 despite soft German inflation data
EUR/USD fluctuates in a narrow range near 1.0550 in the American session on Thursday. Soft inflation data from Germany makes it difficult for the Euro to gather strength, limiting the pair's upside, while US markets remain closed in observance of the Thanksgiving Day holiday.
GBP/USD trades below 1.2700 on modest USD recovery
GBP/USD struggles to gain traction and moves sideways below 1.2700 on Thursday. The US Dollar corrects higher following Wednesday's sharp decline, not allowing the pair to gain traction. The market action is likely to remain subdued in the American session.
Gold at risk of falling
Gold extends its shallow recovery from Tuesday’s lows as it trades in the $2,640s on Thursday. The yellow metal is seeing gains on the back of cementing market bets that the Fed will go ahead and cut US interest rates at its December meeting.
Fantom bulls eye yearly high as BTC rebounds
Fantom (FTM) continued its rally and rallied 8% until Thursday, trading above $1.09 after 43% gains in the previous week. Like FTM, most altcoins have continued the rally as Bitcoin (BTC) recovers from its recent pullback this week.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.