Given how small of a team it was its not like that much would have been done. We also don't really know if they had anything else being worked on as the report was just that they were preparing to pitch a sequel. Regardless I think its a tough sell that a studio who released a game in 2022 and 2023 while not being a large studio was now loafing around.And was probably also already well into development for PS5 prior to the acquisition. The PS5 was likely the lead platform.
If we assume Greenberg was BSing about them being happy with the game the talk of sales is valid but it ignores that this was Microsofts first opportunity to shape what games Tango would make. If Microsoft is capable of managing studios they should be able to find a way to get value out of a studio capable of making a game that good. Its not like they would be married to it having to be HiFi Rush 2.