| jalsonmi said: Yeah, but I think a massive selling of shares on the market means someone is buying those shares up (if I understand the stock market, that is. Which I might not). I would not be surprised to find out that party is EA. In other words, a hostile takeover. I might be wrong, of course. |
That's not how the stock market works. There are currently 72,927,000 outstanding shares of TTWO with a market cap of about $1.865 billion. When the ask volume (sells offers) exceeds the bid volume (buy offers), the stock value typically goes down as seen since the EA bid was offered, but not taken (the offer was for $2 billion, over the current market cap).
Essentially, when EA made their $2 billion bid, the price of each individual stock rose instantly in correlation with the bid, which sent the price from over $16 to $27.61. The high volume of trades that day indicate there were many profit takers who took advantage of the EA bid. This is supported by the fact that the stock value peaked immediately following the EA bid. It never went higher, meaning more stockholders have sold than held following the offer.
Those who held on to TTWO, were those who assumed the $27/share bid by EA was only a preliminary bid, hoping for an offer closer to $34/share. As it turns out, those who took profits after the EA bid was made, gained the most by being the least greedy. Never be afraid to take profits when it comes to the stock market.
At the current market price of $24.85 it is trading at a negative multiple (P/E) of -13.25. TTWO is a stock that has been largely favored by speculators and few others since there are literally, negative earnings per share. Buying TTWO after the offer made no sense at all unless you were under the impression EA would make a significantly better offer. Even with the release of GTAIV, I don't see the value of TTWO climbing significantly above the EA offer of $27.61 a share, if it even reaches that high at all. And it most likely won't unless EA does revise its bid.
Of course if you do see this happening, even without a second EA bid, you've probably already calculated estimate earnings from sales of GTAIV (72,927,000/estimated earnings) which would have given you your estimated multiple (M), reflecting the estimated value of TTWO shares.
