Investidea: Take-Two, because Zynga

Инвестидея: Take-Two, потому что Zynga

Today we have a speculative idea: take shares in game developer Take-Two (NASDAQ: TTWO), in order to capitalize on their rebound after a recent fall.

Growth potential and validity: 15% behind 14 Months; 34,5% behind 27 Months; 10% per year for 15 years.

Why stocks can go up: recently they fell hard, но у этого бизнеса есть потенциал.

How do we act: we take shares now by 156,95 $.

When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

No guarantees

Our reflections are based on the analysis of the company's business and the personal experience of our investors, but remember: not a fact, that the investment idea will work like this, as we expect. Everything, what we write, are forecasts and hypotheses, not a call to action. To rely on our reflections or not – it's up to you.

And what is there with the author's forecasts

Research, like this and this, talk about, that the accuracy of target price predictions is low. And that's ok: there are always too many surprises on the stock exchange and accurate forecasts are rarely realized. If the situation were reversed, then funds based on computer algorithms would show results better than people, but alas, they work worse.

So we're not trying to build complex models.. The profitability forecast in the article is the author's expectations. We specify this forecast for the landmark. As with the investment idea in general, readers decide for themselves, it is worth trusting the author and focusing on the forecast or not.

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Investment editorial office

What the company makes money on

Это разработчик и издатель видеоигр. Подробно о бизнесе компании рассказано в нашей старой инвестидее. Main, что большую часть выручки — больше половины — компания получает от игр серий GTA и Red Dead Redemption (RDR), основной канал сбыта — приставки. It is also necessary to take into account the moment, that a significant proportion of the company's revenue comes from the online modes of its games with the sale of add-ons and in-game items to players.

Arguments in favor of the company

Fell down. The company's shares over the past year have fallen sharply in price - from 213 to 156,06 $. This is partly the fault of Zynga.. But in general, this decline in stocks provides an opportunity to buy them cheaper in anticipation of a rebound..

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Cinga or Zynga. There has already been material about, how TTWO bought mobile game developer Zynga. I believe, что в текущем виде эта сделка противоречит интересам акционеров TTWO: Zynga покупается за 12,7 млрд долларов, with a huge prize 64% to the share price before this news and at the same time Zynga is unprofitable!

If I were the shareholders of TTWO, I would organize a campaign to cancel the deal - and very likely, that there is such an investor-activist, который начнет требовать отмены сделки или покупки Zynga по гораздо более низкой цене — с премией в 15—20% еще куда ни шло.

Against this background, TTWO shareholders have every right to demand dividends., хотя бы в формате разовых крупных выплат: TTWO не платит дивиденды, а ее акции топчутся на месте последние полтора года — и это притом, что бизнес компании достаточно маржинален и стабилен. All in all, the situation with Zynga suggests a lot of room for investor activism, which will allow the stock to rise.

As for the deal itself, it's understandable, certainly, что TTWO не дает покоя успех конкурентов из Activision в мобильном сегменте. TTWO also wants to develop this direction, because it is more promising than consoles and PC. Но Zynga можно и нужно было покупать дешевле. Think, это понимают и в TTWO — и будут стремиться доказать инвесторам, что Zynga — это хорошее дополнение для бизнеса.

Наверняка в течение года TTWO будет делать громкие заявления, которые позволят поднять стоимость акций и вернут уверенность инвесторов.

Инвестидея: Take-Two, потому что Zynga

Black mirror of the past future. С определенными оговорками, but TTWO's business can be considered online gaming.

I have always considered, that the gaming business will be an extremely promising area of ​​​​work in the coming decades, as social mobility steadily declines, and economic conditions are deteriorating. And then the corona crisis happened., and the routine of slow erosion of the middle class is now complemented by Orwellianism with the forced locking of people at home and the virtual ban on socially active lifestyles, который сейчас обходится из-за тестов и карантинов совсем не дешево.

Under these conditions, the business environment for TTWO has become even better., and her competence in squeezing money out of users online will still bring her considerable benefits in the future, поскольку онлайн — одна из немногих оставшихся без существенных ограничений форм социальной активности.

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What can get in the way

Shopping poisoning. Если сделка по покупке Zynga все же будет закрыта на текущих условиях безо всякого бунта со стороны инвесторов, это может вызвать «несварение» у TTWO. Долговое бремя у компании, which is not the smallest, will increase, and these investments may not fight back. to me, certainly, хотелось бы быть оптимистом и надеяться на то, что эта покупка оправдает себя в долгосрочной перспективе. But we'll still be prepared for the worst case scenario..

Nobody, it’s your cousin. Unclear, когда выйдут новые игры из серий GTA и RDR, и это очень плохо. Already existing games of these series will inevitably lose popularity., а гарантии того, that TTWO will be able to release the same masterpieces, which will allow the company to pump revenue for many more years, no at all.

The company has already left several top igrodelov, including GTA creator Dan Houser. Скандал с недавним перевыпуском обновленного триптиха GTA говорит о том, что менеджмент компании находится как минимум в творческом кризисе. So there is a possibility, что TTWO не сможет повторить свой прежний успех.

Furthermore, решение о покупке Zynga может быть сигналом, what TTWO management knows very well, that there will be no GTA VI and RDR III, а если и будет, then they will not be able to repeat the success of their predecessors - and therefore “the mobile direction should be developed”. If it is true, то это очень плохо: business solutions, принятые в отчаянии и от безысходности, редко приводят к хорошим последствиям.

Но также возможно, that this is not a bug, а фича» и компания просто идет по пути Konami, которая когда-то тоже перешла на мобильный бизнес, что позитивно повлияло на отчетность, — even though Konami has turned into a soulless evil corporation.

What's the bottom line?

Shares can be taken now by 156,95 $. And then there is 3 the way:

  1. wait for them to grow 180 $. Think, here it is better to focus on the time 14 months - most likely, за это время ситуация с Zynga как-то разрешится: или TTWO откажется от этой сделки, или купит Zynga по меньшей цене, or swear to shareholders, that the new acquisition will justify its price;
  2. wait for growth until 210 $. Here you should prepare to wait 27 Months. There is a high probability, что за это время TTWO выпустит какую-нибудь новую популярную игру, which will positively affect quotes. Also, during this period, you can get a sense of the development of your own mobile division by the company.;
  3. if you have previously taken these shares for a long time, you can buy them now.
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