Today, Activision stock lost nearly 2 percent of its value, closing the day down $0.23 at $11.67. The slip came even though the company increased its guidance for the quarter, thanks in part to massive sales of the first map pack for Call of Duty: Modern Warfare 2. One theory was that news of recent departures of top talent at the $1 billion game's developer, Infinity Ward, was making some investors skittish.
Wedbush analyst Michael Pachter concurs with that theory--and thinks even more Modern Warfare 2 makers are headed for the exit. "We think that recent Activision share weakness has been compounded by additional departures at Infinity Ward which accelerated this week, and we expect another 10-20 employees to depart over the next few months," he said in a note sent out today.
However, Pachter believes that Activision will be fine even if more high-level developers at Infinity Ward jump ship. Commenting on the departure of 11 employees over the past month (with two more exiting today), Pachter said that the brain drain won't be damaging in the long term.
"In our view, the company will likely replace the departed employees with skilled developers, and while increased competition may impact sales of future versions of Modern Warfare, we expect the company to put out a competitive product," he summarized.
Pachter is maintaining his high "outperform" rating on Activision, offering a target share price of $16.