What do you think this means? Will EA try something now? Discuss.
http://kotaku.com/366195/big-take+two-shareholders-bailing-out
Two words: hostile takeover
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^not always, just that they expect the company to fold. Take Two wont though. GTA4 will make them millions.
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.
My consoles and the fates they suffered:
Atari 7800 (Sold), Intellivision (Thrown out), Gameboy (Lost), Super Nintendo (Stolen), Super Nintendo (2nd copy) (Thrown out by mother), Nintendo 64 (Still own), Super Nintendo (3rd copy) (Still own), Wii (Sold)
A more detailed history appears on my profile.
EA is such a bad thing for the industry...
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
| 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.
Yes, I understand that's how stock prices go up and down, and what you say certainly makes sense for Take Two. Many people saw the EA bid as a reason to buy and the rejection a reason to sell. Those who held did in hopes of a second bid that would raise the stock higher. When it didn't come the market fell out from under Take Two. But considering EA is in the position, of course, of knowing whether they would make a higher bid, is it (and I'm sincerely asking--is it?) possible the decided to let the market correct after the high caused by their offer, and be the ones picking up the stock on the cheap from all these people desperate to sell? That they decided it was just easier and cheaper to become majority shareholders in Take Two this way and perform a hostile takeover?
A few other questions I pose to you (any of you who know the market better than I do):
1. Are there still people in Take Two that have enough stock in the company to hold onto majority shareholder status?
2. If EA is doing this, withholding a second offer in order to allow the market to correct itself and pick up the discarded stock on the cheap, is that insider trading?
3. If the answer to 1 and 2 are both no, is there a chance EA could pull off something like this and takeover before the release of GTA4? Might GTA4 be enough of a stock boost to foil this hypothetical plan I've foisted on EA?
4. Man, does EA suck, or what?
My consoles and the fates they suffered:
Atari 7800 (Sold), Intellivision (Thrown out), Gameboy (Lost), Super Nintendo (Stolen), Super Nintendo (2nd copy) (Thrown out by mother), Nintendo 64 (Still own), Super Nintendo (3rd copy) (Still own), Wii (Sold)
A more detailed history appears on my profile.
jalsonmi said: Probably not. Usually executives and senior management have a lot of shares in the company (from bonusses etc), but not anywhere close to a majority. Big investors like banks, pensionfunds and equity funds tend to have large shares in companies. 2. If EA is doing this, withholding a second offer in order to allow the market to correct itself and pick up the discarded stock on the cheap, is that insider trading? EA can never get a majority in T2 by buying cheap shares. The volumes EA must buy to get ownership are such, that the market will react anyway. To get a majority, EA has to convince the large owners to sell and they can only do that with a very competitive offer. It would only be insider trading if individuals within EA are buying T2 for themselves with the knowledge of a higher offer somewhere in the future. 3. If the answer to 1 and 2 are both no, is there a chance EA could pull off something like this and takeover before the release of GTA4? Might GTA4 be enough of a stock boost to foil this hypothetical plan I've foisted on EA? The value of GTA4 is already incorporated in T2´s shareprice. Once the game arrives it won´t cause a sudden boost in shareprice, because everyone knows the game is coming and there´s a certain revenue expecation. If the games sells above expectation the shares will rise a bit, if it sells below they will drop a bit, but nothing spectacular. For EA this wouldn´t matter anyway, because if they buy T2 this financial year they will also recieve the profits from GTA4. 4. Man, does EA suck, or what? 3 intelligent questions and now this? |
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