Dawn Kawamoto over at DailyFinance wrote an article discussing THQ Inc. (THQI). She brings into focus a licensing deal between the video-game publisher and Mattel, Inc. (MAT). There was also mention of the incredible price action in the stock. So, what are investors to make of the thesis? What about traders?

This is a tricky one. And I've been wrong about THQ's prospects before. It's certainly difficult to predict the movement of a stock that's priced in the single digits. At the time of this writing, the shares were trading at a quote of $6.26.

There are always interesting stories in the marketplace. Today, I'm going to briefly comment on the price movements of three that I am watching.

Activision Blizzard (ATVI) is currently down 3% to $11.52, with significant volume backing the sell-off. Down, is that right, you ask? Yes, I'm afraid it is. I know: Call of Duty: Black Ops is doing excellent business. Millions of copies have been sold, and hundreds of millions of dollars have been grossed. Unfortunately, when it comes to trading on such news, the best bet is to sell out on any anticipatory rise that manifests itself before the event finally occurs.

THQ Inc. (THQI) reported earnings for the fiscal second quarter last week. How does the stock look after the numbers?

Well, to begin with, we're dealing with an equity that is priced in the single digits. At the time of this writing, shares were exchanging hands for $4.14. The 52-week low is $3.33 while the 52-week high is $8.29. As can be seen from the chart, the stock has basically collapsed since peaking back in April. If you look at the corporate press release detailing the Q2 data, you may understand what all the bearishness is about. On a non-GAAP basis, the loss per share widened to 60 cents compared to a loss of 37 cents in the year-ago period. Also, the top line experienced a decline.

THQ (THQI), a video-game publisher that competes with Activision Blizzard (ATVI) and Electronic Arts (ERTS), isn't doing well. The stock's chart is pretty bad. I stated in a previous piece that the stock might possibly justify a little speculation for those who have funds earmarked for such investing purposes. Well, I have to say, I think the situation's speculative nature has increased.

Yesterday after the bell, the company reported it lost 21 cents per share on an adjusted basis during the fiscal first quarter. Last year at this time, a profit of 10 cents per share was recorded. Analysts were expecting a loss of 24 cents per share, according to TheFly.

Video games are clearly one of the biggest multi-decade trends. Even Best Buy (BBY) has redesigned its floor plan to heavily focus on videogames, and also recently got into the used game business to compete with juggernaut GameStop (GME).

Despite the macro tailwinds, video games are a cyclical sector that depend on the lifecycle of a console as well as game release schedules. This year, the sector has particularly struggled as a result of weaker games and investor fears that mobile games will eat into demand for console games.

Not long ago, I wrote about THQ (THQI) and its possible value as a speculative play. Well, so far, that idea hasn't worked out too well. At the time of my piece, the stock was trading around the $6.50 level. This past Friday, it closed at $4.10, seven pennies above the 52-week low. Indeed, it's looking very grim for the video-game publisher.

It appeared as if the fundamentals were improving, but it recently suffered a setback. About the middle of last month, Mark Fightmaster covered the details of the company's obligation to lower its outlook for the next fiscal year. The market doesn't like it when this sort of thing occurs.

The market started out up this morning due to strength in overseas markets, and then a downgrade hit Greece that took the market south. The markets remained in positive territory throughout most of the day and the question was whether or not the positive line would hold up after the markets went into the red-zone at the very end of the day.

Here were today's unofficial closing bell levels:

Dow 10,190.89 -20.18 (-0.20%)
S&P 500 1,089.66 -1.94 (-0.18%)
Nasdaq 2,243.96 +0.36 (0.02%)

Top Analyst Calls

Early Monday morning, video-game manufacturer THQ (THQI) announced that a stronger U.S. dollar and lower-than-expected sales of UFC Undisputed have caused the company to lower its first-quarter and full-year revenue forecast.

The company now believes it will report full-year net sales in a range of $845 million to $865 million, along with managing to break even on per-share earnings. THQ had earlier forcast net sales to total between $905 million and $920 million with earnings between 25 cents per share and 30 cents per share. As for analysts, expectations were for 31 cents per share with revenue of $913.4 million.

Electronic Arts (ERTS), a video-game publisher that competes with Activision Blizzard (ATVI), THQ (THQI), and Take-Two Interactive (TTWO), is being sold off as I write this during the afternoon session. Shares of EA are down $1.16, or over 6%, to $17.64. Volume? It's up there.

As we all know, EA has had its share of problems in coping with the slowdown seen in the growth of the gaming console industry. In addition, internal challenges have plagued the company's business model. The one-year chart is not a convincing graphic; if anything, it tells you to stay away.

THQ (THQI) has been an interesting stock. The video-game publisher continues to remain in the land of single-digit equities. It used to be a powerful investment vehicle several years ago, but now it unfortunately is an entity more prone to speculative analysis. Will it be taken over? Will a new hit emerge from its pipeline? Will the turnaround effort finally cause all the institutions on Wall Street to buy?

Over the last twelve months, the company has traded in a 52-week range between $4.12 and $9.03. The one-year chart illustrates the rocky road management has traveled in its efforts to get back on track. How does the stock look now that fiscal Q4 numbers have been released?

I'll be honest: the thought of buying Activision Blizzard (ATVI) makes me nervous. First, buying just about any stock right now involves a leap of faith: I mean, how do you know the selling hasn't just begun? Investors are scared, my friends, because of macro issues. However, the second reason I'm hesitant about the software publisher is simply because of the video-game industry itself; the latest console cycle is aging, and the industry is waiting for further catalysts to emerge to make the sector an unambiguous buy once again.

Yet, this company is probably the best out there in terms of what it does. Its pipeline is solid, although not as good as it was. Remember Guitar Hero? What, you've already started to forget? And what about DJ Hero? Did that come and go in the blink of an eye?

Take-Two Interactive (TTWO) is the kind of stock I want to take a chance on but just can't bring myself to do so. The situation can be risky unless a fresh bit of Grand Theft Auto content is about to come out into the marketplace. Then again, those who bought ahead of the Q1 earnings report, released yesterday after the bell, are pretty overjoyed this afternoon, seeing that the stock is, at the time of this writing anyway, up well over 9%.

Net sales increased 9%. The adjusted loss from continuing operations was 31 cents per share. Last year at this time, shareholders were looking at a loss of 56 cents per share on the same basis. Reuters says the analyst call was for the red ink to equal 51 cents per share. Good job, management.