Amid Xbox “Reset,” Microsoft Is Having Its Worst Month In 26 Years

Microsoft's stock price has collapsed to levels unseen in 26 years. Shares dropped roughly 20% during June 2026, making it the company's worst month since December 2000 when stock fell 24%. The timing coincides directly with Xbox CEO Asha Sharma's sweeping "reset" of the gaming division, which reportedly involves mass layoffs and potential studio closures.

Sharma's overhaul targets the Xbox business structure itself. The reset signals Microsoft's acknowledgment that its current gaming strategy has failed to generate expected returns. Sources indicate multiple studios face closure risk, including Undead Labs, the developer behind State of Decay. The layoffs extend beyond creative staff to affect corporate and operational teams across the division.

This market implosion reflects investor concerns about Microsoft's ability to compete in gaming. Xbox Game Pass, once considered the company's growth engine, hasn't delivered projected subscriber numbers or revenue targets. Hardware sales remain weak compared to PlayStation 5 and Nintendo Switch. The exclusives pipeline has stalled, with fewer first-party titles launching in 2026 and beyond.

Sharma inherited a division already struggling with execution problems. Multiple high-profile game cancellations and delays preceded her appointment. Redfall and Starfield's mixed reception damaged confidence in Microsoft's ability to greenlight winning franchises. The company's $69 billion acquisition of Activision Blizzard, meant to shore up its software lineup, hasn't yet translated into the competitive advantage investors expected.

The stock decline reflects broader market skepticism about Microsoft's entire strategic direction, not just gaming. But the Xbox reset becomes the visible symbol of that failure. Closing studios and cutting staff signals desperation rather than confidence, sending a message to both players and investors that Microsoft's gaming ambitions require radical restructuring.

Industry observers expect Sharma's reset announcement to clarify which studios survive and which don