What’s Happening With Take-Two Interactive Stock?

TTWO: Take-Two Interactive Software logo
TTWO
Take-Two Interactive Software

The price of Take-Two Interactive stock (NASDAQ: TTWO) has seen a fall of over 9% in a month, while it’s down 23% YTD. The company announced its plans to acquire the mobile gaming company – Zynga – in a deal valued at $12.7 billion in January this year. TTWO stock was weighed down, given that the deal reflected a 64% premium to the then market price of ZNGA stock. Take-Two Interactive recently raised $2.7 billion in debt capital to fund the Zynga acquisition. The company had a debt of a little over $200 million last quarter, while its cash in hand was nearly $2.5 billion. The debt levels will rise meaningfully post the Zynga acquisition.

Furthermore, there are some near-term headwinds, including a decline in gaming user engagement levels after the global economies have opened up and people are venturing out of their homes post-pandemic. Zynga itself has been facing pressure due to changes in Apple’s ad tracking policies. That said, we see the Zynga acquisition as a positive for Take-Two Interactive, given its superior gross margins and fast-growing mobile-gaming business.

Now that TTWO has seen a fall of 9% in a month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a higher chance of a rise in TTWO stock over the next month. Of 250 instances in the last ten years that TTWO stock saw a twenty-one-day fall of 9% or more, 135 resulted in TTWO stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 135 out of 250, or about a 54% chance of a rise in TTWO stock over the coming month. See our analysis on Take-Two Interactive Stock Chance of Rise for more details.

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Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years’ data

  • After moving -0.7% or more over five days, the stock rose on 60% of the occasions in the next five days.
  • After moving -9.6% or more over ten days, the stock rose on 61% of the occasions in the next ten days.
  • After moving -9.2% or more over a twenty-one-day period, the stock rose on 54% of the occasions in the next twenty-one days.

This pattern suggests a higher chance of a rise in TTWO stock over the next five days, the next ten days, and the next month.

Take-Two Interactive (TTWO) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: FDS highest at 4.2%; DOX lowest at -8.6%
  • Ten-Day Return: FDS highest at 0.6%; TTWO lowest at -9.6%
  • Twenty-One Day Return: FDS highest at 1.3%; TTWO lowest at -9.2%

While TTWO stock may see higher levels, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Ashland vs. Microsoft.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 TTWO Return -11% -23% 179%
 S&P 500 Return -2% -6% 99%
 Trefis Multi-Strategy Portfolio -2% -9% 257%

[1] Month-to-date and year-to-date as of 4/21/2022
[2] Cumulative total returns since the end of 2016

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