What Caught Our Attention in the Investment World? – Week of January 10-14, 2022

By Kuldip K. Ambastha

On Monday, January 10, 2022, Take-Two Interactive Software, Inc. (TTWO) shares dropped by -13.1% for the trading day, while Zynga Inc. (ZNGA) shares increased by +40.7% instead. Take-Two Interactive will be buying Zynga at a 64% premium, for $12.7 billion. Take-Two Interactive is well-known for the console-based Grand Theft Auto series of videogames, while Zynga is well-known for mobile gaming franchise titles such as Words With Friends. By acquiring Zynga, Take-Two Interactive may be making a proactive effort to enter into the mobile gaming sector. Also, Take-Two Interactive may be better able to enter into emerging market countries, using a free to play (F2P) model, after having acquired Zynga. Once the acquisition closes, Take-Two Interactive will have approximately 8,000 game developers on its payroll.

Zynga will be expected to operate as an autonomous label within Take-Two Interactive, and will continue to be led by CEO Frank Gibeau. Furthermore, Zynga will have two seats on Take-Two Interactive’s board, while Strauss Zelnick will continue to be the CEO of Take-Two Interactive. On Monday, January 10, 2022, the stock price of the acquirer (Take-Two Interactive) dropped, while the stock price of the acquiree (Zynga) increased. This may be implying that investors are skeptical of Take-Two Interactive’s potential acquisition activity, while at the same time Zynga being bought out at a premium means its stock price increased. Only time will tell if a combination of Take-Two Interactive and Zynga will ultimately reward long-term investors, but for now at the least this deal is the largest ever acquisition seen in the videogaming sector.

Keywords – Take-Two Interactive Software, Inc., Take-Two Interactive Software, Take-Two Interactive, Take-Two, TTWO, Zynga Inc., Zynga, ZNGA, Grand Theft Auto, Words With Friends, videogaming.

Disclosure – The principals of Ambastha Financial LLC have a short option position in TTWO and no position in ZNGA. The clients of Ambastha Financial LLC have no positions in TTWO or ZNGA.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2022 – Ambastha Financial LLC.




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