Its seasonally a tough time for video game stocks, but the TTWO buyout puts further downward pressure on the stock. The Pavlovian response is of course to buy TTWO and short ERTS. The TTWO price is implying that the market expects the bid to increase, so this will cost ERTS even more.
This is all coming off a poor Q3 with a very poor Q4 guidance in an environment where the market has no leniency for companies that under-perform. Video games were on fire this holiday season but ERTS was not. Given the company's profile in this environment, it's not surprising the stock is only slightly above the the 52-week low.
The only stock interesting in the video game sector right now continues to be NTDOY, which may have some valuation concerns.
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Its seasonally a tough time for video game stocks, but the TTWO buyout puts further downward pressure on the stock. The Pavlovian response is of course to buy TTWO and short ERTS. The TTWO price is implying that the market expects the bid to increase, so this will cost ERTS even more.
This is all coming off a poor Q3 with a very poor Q4 guidance in an environment where the market has no leniency for companies that under-perform. Video games were on fire this holiday season but ERTS was not. Given the company's profile in this environment, it's not surprising the stock is only slightly above the the 52-week low.
The only stock interesting in the video game sector right now continues to be NTDOY, which may have some valuation concerns.