Take-Two Interactive (NASDAQ: TTWO), a video-game company that competes with Activision Blizzard (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS), hit a 52-week low on Monday. When I saw that the stock hit this level, I immediately began thinking about buying it. But, I must admit, it seems a little scary to be buying in now.
The reason I'm hesitant is that the magic of Grand Theft Auto IV has essentially come and gone. You know how it's fun and inspiring to buy Marvel (NYSE: MVL) ahead of some big movie releases? Trades like that don't always work out, but at least you feel a little more confident about owning the stock.
Then there's the recent earnings report from Take-Two. The publisher disappointed investors, as Zac Bissonnette observed. The numbers weren't great, and you have to wonder how much interest the institutions on Wall Street will have in a company that not only might be susceptible to the slowdown in consumer spending, but which has already used up its major ace.
There are a couple bull arguments in favor of a trade here, and that's what's got me thinking. Next year should see the release of the sequel to Take-Two's very successful BioShock game. Management has every intention of turning this into another smash Grand Theft Auto-like franchise. Will the anticipation of this title cause the stock to rise?
Also, if the market overall starts to improve, then surely Take-Two's stock will rise along with it. And the publisher has its famous sports titles waiting in the wings for new '09 versions. You know what I'm talking about. Games like Major League Baseball 2K9 and NBA 2K10 have to be worth something.
I think the best thing to do here is wait a little while longer to see how the stock settles out (certainly wait till the real trading begins after the first of the year). My gut is telling me this one should head back to double-digits, and that Take-Two at a single-digit 52-week low may offer value. Make sure, however, to perform your own due diligence before taking action.
Disclosure: I own Activision Blizzard; positions can change without notice.
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