This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.
Source: unsplash.com
What do you do while waiting in line alone?
Chances are, you’re looking at your phone either watching a video or playing mobile games.
With more smartphone users, mobile gaming is a fast growing industry.
Source: skyquestt.com/report/mobile-gaming-market
You’d expect the companies in the mobile gaming industry to grow, resulting in an astronomical growth in their share prices.
However, is this expectation a reality or a mere fantasy?
Let’s dive in to examine this gaming company – Take-Two Interactive Software.
Brief History of Take-Two Interactive Software
Take-Two Interactive Software was founded in 1993.
It wasted no time and acquired a software publisher.
This trait of Take-Two Interactive Software soon became a trademark. The company expanded fast through business partnerships and acquisitions.
Discovering that sports simulation gaming was a large and untapped market, Take-Two Interactive Software worked hard to develop games in this segment.
Take-Two Interactive Software launched and bought over games after games, with Grand Theft Auto, NBA 2K, Farmville, and more becoming global hits.
However, its journey to massive success was rough. The company had to deal with lawsuits and other legal issues before becoming the gaming giant it is today. This is perfectly normal for a growing company in a fast-growing industry.
The next question to ask naturally is: Is Take-Two Interactive Software financially healthy and strong?
Business Model and Financials
Source: tradingview.com
A quick glance at the bar chart above and you’ll notice that Take-Two Interactive Software’s total revenue is on the rise. This is welcomed for any company, signaling growth.
Can the same be said of its net income?
Its net income has been growing between 21% and 300% year-on-year from 2015 to 2020! Those are astonishing figures.
But, its net income has declined for the first time in 2021, recording a drop of more than $200m, or 31.3%.
Should this be a cause for concern?
I think so.
Take-Two Interactive Software has a plan which was shared in its presentation to investors.
Source: ir.take2games.com/static-files/f0f9ff64-0b90-4781-bd7c-76e016e03a1e
Source: ir.take2games.com/static-files/f0f9ff64-0b90-4781-bd7c-76e016e03a1e
The future sure looks exciting. What about the present and near future?
To get an idea, let’s turn our attention to the chart of Take-Two Interactive Software in the next section.
Technical Analysis on Take-Two Interactive Software (NASDAQ: TTWO)
Can you tell whether the share price of Take-Two Interactive Software is in an up or downtrend?
Yes, you are right! It’s in a downtrend.
Here are 2 quick ways to tell the trend:
- There are many more red candles (outline and body) than blue candles (outline and body)
- There are more red down arrows than green up arrows
Do you see a red down arrow above its latest candle?
That red down arrow tells you that a new downtrend is formed. However, should you sell the shares of Take-Two Interactive Software short now?
Let’s have a look at its Trend Impulse Factor indicator.
The color of its Trend Impulse Factor indicator bar isn’t dark green. A dark green bar indicates the possibility of continued momentum, which will be helpful as money is only made when there’s a sustained price movement.
Therefore, I think that the share price of Take-Two Interactive Software may not get slammed anytime soon; its shares isn’t ripe for a position trade yet.
Conclusion
Source: unsplash.com
The mobile gaming industry is expected to continue its explosive growth.
Being in the industry, Take-Two Interactive Software is poised to benefit. However, its finances hasn’t been rock solid. This is a concern and brings us to the chart of its share price.
Even though its share price is in a prolonged downtrend, the tried-and-tested indicators aren’t suggesting that you should short its shares.
Trading stocks without a proper system can be highly risky. This is why the TradersGPS (TGPS) was created.
The indicators (red and green arrows and Trend Impulse Factor) will help you determine if a stock is ready for action to be taken. You won’t have to feel in the dark and make wild guesses.
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