Should You Take a Position in Take-Two?

Posted Sep 3rd 2010 9:00AM by Steven Mallas
Filed under: Earnings Reports, Electronic Arts (ERTS), Activision Inc (ATVI), Take-Two Interactive (TTWO)

Take-Two Interactive (TTWO), a video-game publisher that competes with Activision Blizzard (ATVI) and Electronic Arts (ERTS), saw a huge increase in its share price during Thursday and Friday's sessions. Can you believe the stock was bid to a quote of $10.04 -- a 13% gain?

I myself was impressed. Whenever a psychological level is reached (in this case, above $10 per share), you have to take notice. It may not be logical, of course, but that's how it is.

If you guessed that an earnings report was the catalyst, give yourself a pat on the back. Management beat estimates by an extremely wide margin. Adjusted income of 28 cents per share topped the consensus for a loss of 9 cents per share.

In addition, fourth-quarter guidance is looking very good. The reason: The company benefited from the popularity of the title Red Dead Redemption.

So, should you be bullish or bearish on the stock? I wasn't bullish on it back in July. Since then, it's been up and down, like the market.

Truthfully, despite the company's apparent recent success, I'm not ready to be bullish on Take-Two just yet. Maybe I'm still cautious about the video-game industry in general and of course, it's no easy feat for a company like Take Two to compete against larger players with well established brand such as Activision Blizzard. I find the recent price action intriguing, but I'm inclined to wait before buying. If the rally carries over into the regular session, however, I would take advantage of it and sell into the strength. Realizing profits might be a nice way to get a jump on enjoying a relaxing, long Labor day weekend, but be sure that the decision to do so is your very own.

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: activision blizzard, ATVI, electronic arts, ERTS, featured, inthenews, Red Dead Redemption, take two earnings, take-two interactive, TTWO, video games

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Reader Comments (Page 1 of 1)

11-17-2010 @ 2:06AM

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