By year end investors will figure out a few things...
1) That Take Two will be significantly cash flow negative the next few years.
2) That the company operates solely to enrich insiders
3) That Take Two has nothing more than what's known to offer for a couple years
4) That TTWO's cash/debt position will once again approach breakeven
5) That management took on debt and dodges questions because they are well aware of these issues
Do yourselves a favor and sell for the same price Icahn sold
I didn't follow him into the THQI abyss and would never short TTWO. To me, the sp seems to be saying $1.50 FY15, which I suppose is possible with more buybacks. EA's TItanfall sales certainly show an appetite for next gen, which bodes well for GTA V and Evolve though it'd be nice to see one or both charting pre-orders.
Icahn sold cause money isn't going to go back to shareholders. Z is running the business, not the stock. I'm sure if Icahn was on the board of apple he would have stopped all that wasteful cash investment in the iPod/iPhone/iPad business and gotten a nice one time dividend. Ttwo is clearly a growth story, and isn't the same stock from the GTAIV era that will issue a small dividend then trade lower for 4 years before another GTA announcement. Growing pains toward stability, as we swap out the short term GTA riders from the 12 dollar era last year to the people investing in the business as TTWO moves to a more sustainable model, spreading the wealth across multiple IPs.
I have to wonder what Z has in the cooker as he is hinting at a few different things M&A wise through his comments. He sounds like he genuinely has a secret/ace up his sleeve. You couldn't hear it on the CC, but in interviews it is almost a smug satisfaction with himself, like he has something REALLY good in the works, but won't be saying yet.
"You couldn't hear it on the CC, but in interviews it is almost a smug satisfaction with himself, like he has something REALLY good in the works, but won't be saying yet."
You'll be disappointed to hear that he has sounded exactly like that since his first day nearly seven years ago, when TTWO was around $17 with 71M shares.
If TTWO is "clearly a growth story" how much will earnings be growing in the next couple of years?
The company had a rough day... even though it also had a great day. (go figure) However, $12 by year end??... that's laughable.
They have about 700 million in cash after convertibles. That's over $7 per share in cash alone. You're saying all of their other technology, IPs, games in development, studios, backlog etc... are only worth $5 per share?
Hell, the GTA property alone could probably be sold for $4-$5 per share at the current market price... NBA 2k14 will sell another 5+ million this year... a yearly trend. Over the 5 year GTA cycle, NBA 2k14 could sell 5 million x 5 years = 25 million copies w/ minimal development costs. 5 million less than GTA. I guess you could say NBA 2k14 is worth $2-$3 per share if they can hold the crown. There's $13 per share right there.
Now throw in the rest:
Thinking it can't go to 12 will get you burned. She was at 8 when GTA 5 was still loaded and in the chamber. Could be a rough year if they keep putting of GTA PC, next gen, and keep twiddling thumbs with their GTA 5 DLC. That being said, this company is much better off than it has been in years past. Still doesn't change the Z-bombs.
700M? Try looking at that balance sheet again and you'll find that number to be lower. Moreover, look at the accrued expense line - that's where they're hiding compensation to Rockstar's management. It's obvious because that number is enormous. They don't pay them all in one chunk. They want to burn shareholders in slow motion.