Friday, December 4, 2009

Take Two Drops Three

OK, I guess it's somewhat understandable that when you miss your earnings numbers this bad your stock gets creamed.  But Come On!  Thirty Frickin' Percent!  They miss the earnings number by 40c and you take them down at a pace of 8x earnings!!  This isn't a lost annuity, it's a one timer!  So what if management can't manage costs.  So what if talent is a pain in the ass.  So what if management continues to issue themselves too many shares.  Video Gaming is like radio in the 20's, television in the 40's, sex in the 60's, i digress.  The point is that a tiny fraction of the future time and money that will be spent in and on video games has been spent.  The stock isn't just about this year's earnings, it's about having a call option on being a player in video games for years to come, and having a place at the table when the industry is about 100x bigger.   TTWO is way cheaper than competitors on Enterprise Value to Sales, and don't forget the $30 per share bid by EA last year.  This one isn't if, it's when..

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