Why Shanda Games Limited Stock Popped

Is Shanda Games' jump meaningful? Or just another movement?

Jan 27, 2014 at 5:42PM

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 Shanda Games Limited (NASDAQ:GAME) rose more than 15% Monday after  the company announced it has received a non-binding proposal to take the company.private for $6.90 per share.

So what: The offer, which values Shanda Games at $1.9 billion, came from a consortium including Shanda Interactive Entertainment and an affiliate of Primavera Capital. Currently, they collectively own around 76.2% of Shanda Games' outstanding shares.

Now what: Shanda Games' board hasn't made a decision on whether to accept the offer, which represented a 21% premium to Friday's close. Shares closed today at $6.50 per share, reflecting uncertainty surrounding whether the acquisition will go through.

To be sure, even though the company has had trouble growing its top line over the past several years, it's hard to claim shares are overvalued trading around 8 times next year's estimated earnings. But the stock has also more than doubled over the past year -- including a 45% pop over the past 30 days alone -- and closed today at a new 52-week-high of $6.50 per share. In the end, while I'll admit Shanda Games could potentially negotiate its price upward, I wouldn't blame investors for taking profits today.

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Fool contributor Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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