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
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.