Video Game Stock Higher on Earnings, Job Cuts

The "Call of Duty" stock has struggled on the charts since October

Shares of Activision Blizzard, Inc. (NASDAQ:ATVI) are up 6.5% at $44.39 this morning, after the company reported fourth-quarter earnings and announced plans to cut up to 8% of its workforce -- confirming layoff rumors from earlier this week. The "Call of Duty" maker also unveiled a new buyback program of up to $1.5 billion, and issued lackluster full-year guidance. Analysts have been quick to react, with ATVI stock hit with no fewer than nine price-target cuts so far.

Activision stock has suffered since peaking at $84.67 in early October, plummeting more than 47% in that time frame. The equity touched an annual low of $39.85 this past Monday, Feb. 11, and today's upside momentum has stalled in the $45 area -- a level that acted as support for ATVI before a bear gap on Feb. 6, brought on by ugly earnings out of the video game sector.

Despite the stock's recent struggles, Wall Street remained bullishly biased toward Activision ahead of earnings. A majority 17 of the 22 covering analysts still maintain a "buy" or "strong buy" recommendation. Plus, the consensus 12-month price target of $54.59 represents a premium of more than 23% to current levels, suggesting today's bout of price-target cuts wasn't unexpected.

Near-term options traders also remained positive. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.54 indicates that near-term call open interest nearly doubles put open interest, looking at options expiring within three months. What's more, this reading sits in the lowest percentile of its annual range. In other words, short-term options players haven't been more call-heavy in the past year.