Rusty, you know this company as well as anyone. Why do you think it is so unlikely that there is some sort of Playstation 4/GTA5 tie-in that you've sold the balance of your stock?
Personally, I have stayed long for the same reason that I stayed long when the guy who sold at 11 was proclaiming his bearishness to the board, saying the move was done: because there are other ways to hedge the potentially god-awful macro situation. As long as the market stays buoyant, TTWO will have a bid, because the computers search out firms that promise a.) year over year growth; b.) have loads of shorts and put options; c.) are in an uptrend. How many firms will show revenue and earnings growth like TTWO will show in the next fiscal year? Equity funds are desperate for growers. It's crucial to see it as funds see it.
This is NOT to say that TTWO won't go down. What I am saying is that relative to QQQ type stocks, it should outperform over the year. Why not balance a long position here with a short position elsewhere? Why not pick on a stock that is already in a downtrend to short? There are plenty.
Looking at the chart, I can see why some would say sell. Clearly, there ought to be resistance at 15. However, I think the above points outweigh this resistance. Fund managers just MUST find winners for their quarterly statements. The game they play is not performance; it is about money under management, and you don't attract it by showing losers on your statements. Thus I expect TTWO to outperform all year and I'd be cautious about selling it out when there are loads of other ways to be net bearish.
I sold also but I still believe in TTWO. I just think it's time to take profit and look for a re-entry in the summer time before GTA5. The next 2 quarters will be ok..but nothing like this last one so the explosive stock moves won't occur unless something else comes up like a buyout. It also needs to fill the gap at around $13.20. It might be a awhile before it does but it will and I am betting on it being this summer. That is when I will rebuy and watch it go from 13 to 20 on GTAV. I think if you stay long from here you still are going to make some serious cash when GTAV hits.
Sentiment: Strong Buy
I think there is a decent change that Bioshock Infinite is a big hit which could lead to continued momentum. But I am also worried about the overbought state of the stock market and the overall macro picture. (In essence, our "recovery" and the stock market "recovery" is based on central bank money printing.)
But congrats Rusty on your profit and your discipline.
I made with all of my trades, likely over 70% on my latest investment which was a significant 6 figure position. I'm sure you are making money and as are others. I'd never say anyone should ever be cautious about taking a profit, especially in such a volatile sector and stock such as TTWO.
I don't think the stock is going to go down substantially from here. I could see it running much higher. But I have always stated I was going to be pleased with $15-$16 - I never dreamt of $26 buyouts.
That said, TTWO now has 120+ million shares diluted. The $450 million in cash is from a lot of this dilution. They will generate tremendous cash going forward from GTA V. But then what? Do you honestly think Rockstar is going to have a RDR in time for new consoles in 2014? I think there is no chance of that. Moreover, even if they did have one in time, the new consoles will have such a low penetration that sales will be much lower than RDR on the 360/PS3 in 2010.
At $20 per share, TTWO will be valued at $2.4 billion. We're talking about a company that has management that wildly has missed forecasts since 2008. I'm sure I don't need to remind you guys of the Zelnick bombs.
So that's why I cashed out. There is still upside left, but I caution you all not to forget history or else you will be waiting for RDR 2 in 2 or 3 years or GTA VI in 5 years to recoup your investment.
I have to agree with Rusty somewhat on this one, I too have cashed out well over half my position for a variety of reasons, it's been agreat ride but there are some questions out there for both the short and long term. I'm not seeing that great of preorders anymore for BI, so I am wondering more about the degree of its success, overall market seems overbought, and I really don't believe anything around a buyout. If we pullback significantly, I'll go back in full for the potential of a GTA ride, but for now I'm fine with a much smaller position.
Why wouldn't RDR be developed for both current and next gen consoles?
I think you may prove correct in price direction simply because the world is headed for macro trouble. Raising taxes and cutting spending just isn't a good recipe for macro. At the same time, the Fed is taking a lot of mortgage debt off the hands of the banks. I will be putting on an enormous hedge this week, nonetheless.
I wonder if TTWO may surprise you with what they have in the works for the post GTA5 period. For all the Z bombs, I think he's done an overall outstanding job of developing new titles. The only major disappointment has been Max Payne, and I think that's generational. (I'm curious to see if the new Die Hard does any business.)
Rusty, Congrats on the profit. I've taken the trading shares off the table over the last few days but I'm keeping my core position. I truly believe that more than ever ATVI has a strong motive for buying TTWO. I also believe, like Bhatia, that TTWO can regularly earn $1.50 eps. Thus, I think that at a minimum TTWO ought to be able to get to $22.50. I also think that FY14 will be TTWO's most profitable year ever and GTA V will sell incredibly well. I also think the buy back will support the sp until then, though as always, a pullback at some point is quite possible. I had a feeling you would sell out but wasn't sure. Again congrats, nothing wrong with taking a profit. I'm hoping that this whole industry keeps up the move higher and that most of all Kotick gets wisdom. I think $20 is a real possibility in the next few months.
Sentiment: Strong Buy
Don't you think this company is far too small for more than a few funds to get in without it getting ridiculously overpriced and overvalued? And don't you think they know this and would avoid this problem? I think they look for larger companies where they can get in and out without moving the price.