Take-Two (TTWO) is off almost 5% today to $13.45 and it has traded within a penny of its 52-week low. That low was set when the company was operating in the shadow of incompetent management and an SEC investigation. The shares should not be there again now that a new management team is in place.
But, with the delay of the company’s premier product, "Grand Theft Auto", the stock has run down from over $21 on July 17
Bear Stearns upgraded the stock from "underperform" to "peer perform" this morning, which must be a bit humiliating.
The market’s concern about Take-Two is whether it has enough cash to get to the launch of its big game.
In its most recent 10-Q, the company reported a loss from operations of $51 million. The company’s cash on the balance sheet was just over $108 million. Receivables were $70 million and payables, accrued expenses, and other current liabilities were $210 million.
All of that taken together does not leave much of a buffer for a company with a $50 million operating loss.
The company does have access to capital, but it is the kind no company should want to take. It is a line of credit secured by receivables and the terms are onerous.
So, Take-Two is in a race against time. It cannot afford to lose much more money, but in revised guidance it says its revenue will fall far short of expectations and its losses will rise.
But, the stock won’t.
Douglas A. McIntyre
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.