“Blank Check” For Xbox? Microsoft Stock (NASDAQ:MSFT) Dips as Rumor Control Sets In

A rumor recently slipped out of tech giant Microsoft MSFT -1.08% ▼ that briefly had Xbox fans feeling very happy about their console of choice. Though this rumor got subsequent moderation, and toned down a bit, it was still clear that Microsoft has no plans to abandon its console altogether. However, its support for said console will have some limits to it. The combination left investors a bit put off, and sent shares down fractionally in Monday afternoon’s trading.

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After Project Helix first broke cover, reports emerged of a town hall meeting with Asha Sharma, new CEO of Xbox, which featured actual CEO Satya Nadella. From this town hall, reports emerged that Sharma would be given a “blank check” in terms of support for the Xbox console. Microsoft moved in to clarify, stating that that was not the case.

One of the key lines that supported the concept was, apparently, never actually said. Frank Shaw, Microsoft’s chief communications officer, noted, “’Asha Sharma has my full trust and has A BLANK CHECK to revive Xbox and the trust of the fans no matter the cost’ was not said.”

Somewhere in the Middle

But even as Microsoft quashed one rumor that Sharma would have unlimited free rein to rebuild Xbox from its current status, it did make clear that Microsoft was not out of the Xbox market entirely. The town hall meeting featured one line from Natella in particular: “For me, we’re long on gaming. We’ll continue to invest, and we’ll always do so.”

Misinterpreting this as a “blank check” is not necessarily difficult to do. The phrase “we’ll always do so”, which was reportedly verified from multiple transcripts, suggests a permanent presence. Though admittedly, it does not suggest an amount, which in turn suggests anything from “blank check” to “selling our games through third parties.” There will always be some investment, though how much is a point that can change as circumstances warrant.

Is Microsoft a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 33 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 7.58% rally in its share price over the past year, the average MSFT price target of $594.02 per share implies 46.62% upside potential.

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