Remember that notorious episode from last summer in which Take-Two Interactive
Let's assume that no insiders have sold shares over the past week. It would stir up another controversy if execs were dumping stock between when the company had received the subpoenas on June 19 and last night's admission. That would be rich.
Take-Two seemed to be coasting along until last summer, riding high on the turbo engine of its Grand Theft Auto franchise. Then some renegade Wall Street thugs ripped open the door and took off with the company's growth vehicle.
The "hot coffee" incident broke so quickly that there wasn't even agreement in Fooldom as to what this meant for Take-Two. Some argued that "the tumble may be just the beginning," while others thought this was a golden opportunity for some great publicity.
However, as chains such as Wal-Mart
It doesn't help that this incident has gone public just as the industry is languishing, in anticipation of having all three next-generation video game systems on the market before diehard gamers stock up on fresh titles.
Take-Two joined its rivals in hosing down its profit targets over the holiday selling season just as similar announcements were coming out from the Electronic Arts
Investors hate uncertainty, and the cloud of subpoenas was enough to send the already depressed shares off nearly 20% last night. The stock was at $27.07 the day before the "hot coffee" news hit and has now fallen by more than 60%.
That may bring the vultures around. I can just imagine EA, Activision, or even a more family-friendly publisher like THQ
Take-Two will argue that it's not fair. It responded when the "hot coffee" hack was made public and accommodated angry retailers. The company's share price -- like its games -- shouldn't be stuck in the pre-teens. Crying won't do any good, though. The stock is unlikely to bounce back until the investigation is cleared, and that will give potential suitors plenty of time to size up what the company is packing under the hood and then steal it at a rock-bottom price.
Longtime Fool contributor Rick Munarriz is old enough to remember playing on an Atari 2600 before it became a relic. He does not own shares in any of the companies in this story.The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.