Analyst: GTA IV Won't Lift Take-Two's Value
Grand Theft Auto IV sold $500 million in its first week of sales, a record
May 7, 2008
Take-Two Interactive Software announced Wednesday that the company’s Grand Theft Auto IV video game sold a record $500 million in first week since its April 29th release.
With 3.6 million units sold on the first day of the game’s release, about $310 million in sales, the company claims that these figures represent the highest day one and week one sales ever achieved in the entertainment sector.
On February 15, Electronic Arts offered Take-Two an unsolicited bid of $25 per share, then increased the bid to a $26 per share offer on February 19.
At the time, Take-Two opted to put any possible discussions with Electronic Arts on hold until after the release of Grand Theft Auto IV. Strauss Zelnick, chairman of Take-Two, now believes that strategy is paying off.
“The critical and consumer response to Grand Theft Auto IV vindicates our strategy of waiting until the launch with regard to E.A.'s offer,” Zelnick said in a statement.
While Take-Two stock has increased since the release of Grand Theft Auto IV, the growth has been slight.
As of press time, Take-Two shares traded at $26.40, slightly higher than EA's offer price of $25.74 per share.
Todd Greenwald, an analyst at Signal Hill, does not believe the success of Grand Theft Auto IV will significantly impact the company’s valuation.
“If Take Two thinks that $500 million in sales in a week will drastically alter E.A.’s offer, they are probably misguided,” he said in speaking with MergersUnleashed.
Greenwald does expect that EA could raise the bid into the range of 28 or 30, “but I get the sense that [Take Two is] looking for something much higher, closer to 35 or higher,” he said.
“Also, every unit that Take Two sells right now is a unit that EA doesn’t get to sell,” Greenwald added.
At press time, EA shares traded at $52.50.
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