Video Game Stock Ticks Lower After Weak Forecast

No fewer than three analysts adjusted their price targets

Deputy Editor
Aug 3, 2021 at 10:05 AM
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Take-Two Interactive Software Inc (NASDAQ:TTWO) is down 9.4% to trade at $157.58 this morning, on track for its worst single-session drop since February 2020 and is trading at its lowest level since mid November. This weak price action is due to the company's weak sales forecast amid two "immersive core" game delays, despite also reporting better-than-expected fiscal first-quarter earnings and revenue. Plus, regulation concerns are creeping in, after China's state media referred to online games as "spiritual opium."

To follow, Credit Suisse and MKM Partners cut their price targets to $210 and $180, respectively, while Wedbush raised its price objective to $222. Of the 19 analysts in coverage, 14 carry a "buy" or better rating, with the remaining five a tepid "hold." Ahead of today's adjustments, the 12-month consensus price target of $218.75 was a 26.3% premium to current levels. 

Short interest has been skyrocketing recently, up 48.3% during the two most recent reporting periods. Now, it would take over two days to buy back these bearish bets, at TTWO's average pace of trading. 

Over in the options pits, Take-Two stock's 10-day put/call volume ratio of 0.93 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 84% of readings from the past year. This means that while calls are just barely beating out puts on an absolute basis, puts are being picked up at a faster-than-usual rate. 

TTWO is facing pressure on the charts, with the 120-day moving average rejecting yesterday's attempt at a rally. Year-to-date, the equity is down 23.7%.


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