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Take-Two Interactive Software Inc. Message Board

  • btfbtfbtfb btfbtfbtfb Mar 19, 2007 4:10 PM Flag

    Valuation becoming a question

    for me, I've done very very well on this stock, but I've started selling some (not all), simply because this valuation is becoming a bit rich... after the hoopla is finsihed and assuming it isn't sold outright, and considering no earnings this year, I think this thing could thud a bit after the excitement of the next week fades.

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    • The TTWO valuation is still peanuts when compared to ERTS and ATVI. There was a time not too long ago that TTWO had a higher market cap than ATVI. That will probably never happen again, but I expect it to make up a lot of the gap by the time GTA4 is out.

      • 1 Reply to navquest
      • thats interesting you say that about ATVI's cap of $5b. ATVI has shit for products this year and TTWO has GTA4, BioShock, and ALLPRO football 2k8. this is the best product offering from TTWO maybe ever but, certainly since San Andreas and if you believe the market trades on products then market cap will need to close substanially and that doesn't mean ATVI falling from $17.50 by yearend if anything up.

    • No earnings according to old management guidance and their FY structure. If new management changes the FY to align with the rest of the industry, it's a whole new ballgame. When GTASA was released, they booked $940 million in sales and $120 million in earnings in Q4/Q1 of 2004. If they change their fiscal year so not to divide the release between two years, they'll be BIG earnings!!!

      That's a big if though and it's smart to lock in some gains.

      ATVI has generated an average of $86 million of profit a year over the last 3 years, $42 million last year and they're guiding for around $75 million this year. ATVI has $5 billion market cap as a result of some good execution of late. They were less than $2 billion 3 years ago. TTWO is very similar to ATVI in terms of sales and potential profits before the disaster that was last year. If they do manage and change their fiscal year around, TTWO can end up delivering over $1.5 billion in sales and probably $100 or maybe $200 million in profits. I'm not saying TTWO deserves a $5 billion market cap, but TTWO at $2.5 billion or half of ATVI's market is worth $33 a share. At $4 billion, it's $53 a share. That's what these investors see, they know there's a tremendous potential from these levels. Just because someone fumbled the ball in the past doesn't mean they can't run in it for a touchdown. The potential is there, GTA can go on to sell more than any previous version. The NFL might ink a deal again with 2K, and it's all off to the races in a very strong and growing industry. People like to point out to years without a GTA release, during legal and political battles, and during transition but they forget the years when TTWO would generate $70-100 million a year, even with their broken October fiscal years.

      • 1 Reply to cak165
      • "they forget the years when TTWO would generate $70-100 million a year, even with their broken October fiscal years."

        They weren't "broken". It was obviously deliberate to allow them to stuff the channel for the holidays.

        Btw, you do realize that over a two or more years period, the timing of the FY has no effect on earnings? If they booked more GTA4 this year that would mean less next year...

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