Why Take-Two Shares Just Lost the Game

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Take-Two Interactive (NASDAQ: TTWO  ) are hovering around a 6% loss this afternoon after plunging as much as 11% in morning trading. The game developer most known for Grand Theft Auto has decided to delay the release of the next edition of its flagship franchise.

So what: The market freaked out over the prospect of waiting until September to get another chance to drive around in a sprawling virtual city while murdering civilians and evading the police. Grand Theft Auto V, originally slated for a spring release, seems to have been pushed back by as much as six months in order to fine-tune it for a rabid fan base.

Now what: The game is still coming out, and Take-Two has been taking its time -- the game was originally announced at the end of October in 2011. Since that time, Take-Two's shares have been on a roller-coaster ride until today, where it sits at a 14% loss since the announcement. A number of games have been blockbuster hits in the past year while simultaneously tarnishing the reputation of their studios -- Activision Blizzard's Diablo III and Ubisoft's Assassin's Creed III come to mind.

Game developers can't focus exclusively on quick sales while neglecting game design and balance. This is the right decision for Take-Two's long-term future, but as we approach release date, it's likely that most of the expected gains from the game will already be baked into the stock. GTA IV also endured a six-month delay, but its release shot Take-Two's shares up to all-time highs. If you expect a repeat performance of that 2008 megapop, you might as well buy in now.

Want more news and updates? Add Take-Two to your watchlist now.

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