Wall Street, in this case, is no more forgiving than the bloody streetscapes of today's most popular video games. Just ask Take-Two Interactive
Sure, we've long suspected that disappointment was on the way. But that didn't make today's announced 21% drop in revenues look any better. The slimmer $153 million in sales put a big hurt on earnings or, more accurately, losses. The red ink totaled $0.33 per share, a big disappointment compared to last year's positive $0.35 per stub. The loss was greater than the $0.15 analysts expected.
Sure, you might say it's not fair to compare quarters like this one with previous time periods that benefited from Grand Theft Auto. But the fact is, investors are paying for companies that can keep delivering the goods. Motley Fool Stock Advisor picks Activision
Guidance numbers have been dropping faster than virtual thugs meeting the business end of a meat cleaver. Full-year guidance released today is for $1.63 per share, an 18% drop from the last guidance and a full 34% less than March's full-year fantasy of $2.45 per share.
Management shuffling and accounting shenanigans present other hurdles to any investor who thinks that a recent drop in share price might put the stock in the land of screaming values. Companies are sometimes cheap for a reason. And until Take-Two does better, reasonable investors should look elsewhere.
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