hopefully the buyers emerge at some point
I'm a long term investor who likes fundamentals, however I do mind the technicals.
I like the hammer pattern today on great volume. Typical bear raid tried to take the air out of the earnings release, which has been the norm for 3+ years, but there were clearly buyers after the results.
They certainly have the capital
"In the third quarter, the game was not only the single largest contributor to recurrent consumer spending; it also generated its highest revenue ever."
"we are now forecasting that revenues from Grand Theft Auto Online will be up year-over-year in fiscal 2016"
GTAO continues to GROW nearly two and a half years post launch for a consoole game, phenomenal.
if we take the upper end of guidance (i think this is conservative given mgmt routinely beats guidance), we are at $8 in earnings over a 3 year period or $2.67 per share over that period. Given market price of $34 we are looking at an average PE just over 12. Factor in all the cash (enterprise value/earnings) and the shares are insanely cheaper.
we know RDR is in the pipeline, I speculate paid DLC (although mgmt has stated this will fragment online community) for GTAV, we are two and a half years into the GTA cycle (5 years historic, although we benzies out who knows), a world class veteran team newly assembled at Hangar13 (first product mafia3), the stock clearly has a lot going for it moving forward.
Shares look cheap, I continue to hold, have only sold shares for diversification purposes as TTWO becomes a larger and larger percentage of my portfolio (as Zelnick says, this is a "high quality problem").
If you are a short term trader, I can't help you much, TTWO is discounted to peers for 'erratic earnings' (a problem I think has drastically improved), but if you are a long term investor (as I am), even on the medium term we have clear catalysts (most notably RDR), I would confidently hold. Macro picture looks bright, new consoles selling better than last generation, vitual reality a driving force to upgrade console hardware quicker than last cycle, in my opinion a cyclical industry (tied to console refresh cycles) in a secular growth industry (video games).
Near term who knows, not a lot of credibility given to TTWO given it's history (albeit 5 years ago) of wide loses in non-GTA launch years, and accounting scandals (pre-teamZelnick)
"Revenue from recurrent consumer spending increased 45% year-over-year"
Wow spec, think you nailed it GTAO continues to impress. 2 and a half years into the GTA cycle and the company is still bringing in nearly $2 a share... Impressive! TTWO is a whole new beast
also factor in Zelnick slashing overhead, all that cost cutting may also be paying off.
"permission to print money"
we may have a lean mean money printing machine
currently all dilution is accounted for in the share count, if company uses some of it's cash hoard to repurchase the debt back, diluted count is greatly reduced (as anticipated by Michael Pachter of Wedbush).
TTWO, at the time of issuance, was likely forced to sell convertible debt (low quality debt), but as it's cash balance has ballooned in recent years and profitability as appeared more consistent, hopefully TTWO can use more traditional forms of debt in the future.
I doubt its dead, I think acquiring the IP at such a low cost basis allows them some wiggle room, one more shot. But it wouldn't surprise me either, given the outright boycott by many core gamers.
Do you anticipate mafia3 being open world? Seems like a very popular format
Given the success of GTAO, I think many IPs are getting pushed back. I still think gtav paid dlc is in the pipeline, clearly rdr, a remaster could be likely given rockstar not allowing backwards capatibility. Not a lot of short term excitement, but I think it's the right strategy to satisfy wall street desire of more consistent earnings.
i was hoping Evolve would be on a more consistent schedule ala CoD/battlefield. mgmt has declared it a permanent franchise but dropped the ball with the DLC/lack of story mode strategy. Similar game I believe to a FPS, multiplayer focused, changed the arena, charecters, weapons, rinse and repeat with a minor story mode. I like the fresh take with asymetric multiplayer, but I am dissapointed in the reception of the game, have to wait until evolve 2 to really determine if this strategy can be salvaged, also even though the asymetric multiplayer recieved a lot of hype and praise from the critics, i doubt it will ever me as mainstream as a FPS, simple game to have sequels with, much like a battlefield or even a mortal kombat.
excited to see mafia 3. we used the GTAV windfall to fund some amazing talent over at hangar13, if they can start pushing out a title a year like rockstar had been doing prior to GTAV, again reason to remain excited. Hangar13 likely won't have an annual launch title, but perhaps they are given the keys to bioshock franchise?
tv... just ads, newspapers... just ads, magazines... just ads, billboards... just ads.
if you don't think the ad market is HUGE, particularly in the developed world, I would suggest you are living under a rock...
only difference between TV/newspapers/magazines, and other media companies, the user's within FB generate the content, very low cost here, tremendous margins
sure AMZN can grow revenue, but let's talk valuation. I would argue this company is already valued at a level that captures most of this growth you speak of. AMZN currently has a market cap larger than WMT even after the AH plunge.
It sounds like you may assume that if AMZN grows sales 10 fold, it's stock will appreciate 10 fold, you don't propose that AMZN may transform into a 3 trillion dollar company do you? Let's say you do and walk down this road, once it hits peak market share what earnings multiple would you anticipate paying for a company done growing? 10? 15? this would imply 200 - 300 billion in annual profits, given there are only 7 billion people on the planet, you begin to assume a company can generate 30-40 dollars in profit for every person in the entire planet. Pretty optimistic scenario in my mind.
Don't get me wrong, former AMZN long here that sold far too early (in the 400s) but I can't justify this valuation in any way shape or form. I am actually getting interested in the correction, perhaps at some level I re-enter my long, certainly not here.
Coming from the guy whose been long for 12+ months....
Well done! Victory is yours!
"GTAV is off the list PERMANETLY"
-MMX October 10th, 2015
the fool has lost face so many times it's hard to even listen at this point.....
***CALLING BOTTOMS IS HAZARDOUS TO YOUR WEALTH***
At this point I feel pretty bad for you kingly....
You've been pumping oil for over a year now....