According to Netherlands-based PSFocus, sources have told them that Bethesda will release an official statement next week announcing Prey 2's cancellation.
While this is simply a rumor, and should be taken with a grain of salt, Bethesda and Human Head Studios have indicated that the upcoming sequel isn't doing too hot. Human Head was scheduled to talk Prey 2 at GDC, but the developer cancelled the talks a few weeks before the event took place. In addition, GameInformer reached out to the two companies on the possible cancellation, and Bethesda's representative told them they had "no comment."
GameZone will keep you up to date with this story as details become available.
Source: [PSFocus]