HomeMost PopularInvestingTake Two Interactive (TTWO) Stock: A Buying Opportuntiy Emerges After Unfounded Drop

Take Two Interactive (TTWO) Stock: A Buying Opportuntiy Emerges After Unfounded Drop

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I have to admit, I’m not big on video games, and the concept of Grand Theft Auto (GTA) doesn’t exactly capture my interest. But that doesn’t mean I’m against the game or the gamers who enjoy it. In fact, I wouldn’t hesitate to invest in the company behind GTA, Take Two Interactive (TTWO), especially when an attractive chance arises. And guess what – that opportunity presented itself this morning.

TTWO chart

As visible from the chart, TTWO experienced a significant drop after the market closed yesterday, plummeting to a low of 146.50, approximately 7% lower than the previous day’s closing price. Although the stock has shown a slight recovery today, it’s still down. Surprisingly, the reason behind yesterday’s sell-off seems to be entirely baseless.

What happened was a leaked footage of the much-anticipated GTA VI surfaced on a social media platform, generating swift speculation. However, it was soon confirmed that the leaked video didn’t reflect the actual quality of the game. Take Two’s subsidiary, Rockstar Games, released the official trailer on YouTube ahead of schedule, clearly indicating that the leaked content wasn’t representative of the game’s real quality.

One would have expected the stock to quickly rebound from this non-issue, yet as of now, it hasn’t. This raises the question – why is TTWO still trading around 4% below yesterday’s close despite the debunking of the ‘reason’ behind the drop?

Ironically, this is likely due to the immense potential of the upcoming game, rather than the contrary.

Back in 2013, GTA V raked in a billion dollars in sales within days of its launch and went on to become the second best-selling game in history, with 190 million copies sold, trailing only Microsoft’s (MSFT) Minecraft, which sold 300 million copies. Anticipation for GTA VI to achieve similar success, or perhaps exceed it given the decade-long gap between releases, has prompted a surge in stock purchases. This has set the stage for a classic “buy the rumor, sell the fact” situation, sensationalized by the disappointment stemming from the leaked footage.

Investors who bought TTWO shares with the intention of selling for a profit upon the new game’s successful debut were rattled by the leaked footage or the sudden stock dip so close to the official release date. Consequently, many rushed to unload their positions. However, as the non-story came to light, a considerable portion of the investment money stayed away, leaving the stock trading at a markdown today.

However, none of this changes the fact that GTA VI is poised for a colossal release, expected to pour in significant revenue for TTWO. If anything, the leak has generated substantial free publicity for the game, making the stock appear more appealing after a drop chiefly based on groundless speculation.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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