TTWO $120 This thing reported last night and it was so bad it was halted. Its up $14 on light volume pre-market. There's some fake news out there that said they beat. Somethings up. North of $120 this thing has to be a screaming short. I mean their quarter was terrible.
Well, it got down to 116.35. Bouncing up now. CEO on Cramer tonight. Who knows. The books are complicated to figure out. Looks to me like they lost money though. Of course that doesn't matter anymore. If EA is any guide, this thing will be below $110 in a week or so. Its setting up here for a short squeeze at $118. Let it run. It could take out $121 easy today or tomorrow.
The thing with software publishers is they have crazy expenses shoved in to make it have losses only for it to make $4-$5EPS, a year later. Red Dead Redemption 2, is a billion dollar game, next year. The 1st one was one of my all-time favorite games. They also have its 2K basketball franchise being used in Esports, backed by current NBA owners as they have dropped $15-$30M lately for a team. IF it performs like Counter Strike or whatever they play at these Egaming tournaments it has some upside. That being said I have no idea how a team of 6-8 people can be sponsored for millions to play games with it shown on ESPN.
Thats a very good point. As I said earlier, its very hard to read the report. Margins on software are off the chart. There's no denying that. The gift that keeps on giving.
I just skimmed and you're right as earnings themselves suck but I had no idea micro transactions, which are like buying power ups or coins, to be hundreds of millions. I think at EA with their sports franchises it's 35% of revenue. They also take in hundreds of millions in video gaming advertising and other things under net bookings. While I would raise capital they do have $20, per share, in cash. I think it is this stay home society so stocks like NVDA, AMD, EA, ATVI, NFLX, AMZN, and DPZ have been on fire, multi-year runs. Boy wish I got it for under $10, but it wasn't profitable in years it didn't have a GTA game. Technically, it's hitting new highs, every week, but fundamentally I think it's getting expensive even if Red Dead 2 boosts EPS $2/$2.5, next year. As for your, last statement, that is true as the margins at my former employer was 75-80% on our ERP software but that is all relative as other parts had low margins which meant leeway when putting deals together. It could continue to $130, $150 yet. Good luck!