Take-Two Struggles to Break Out Following Weak Earnings

Take-Two Interactive Software, Inc. (TTWO) shares briefly broke out from prior resistance on Thursday morning but ended the day with a gain of less than 1% following mixed fourth-quarter financial results. According to analysts following the stock, it was a "messy quarter with a lot of moving parts" that led to significant volatility during Wednesday night's after-hours trading and Thursday's regular session.

Fourth-quarter revenue fell 21.2% to $450.3 million – beating consensus forecasts by $5.47 million – but earnings per share of 77 cents missed consensus forecasts by 19 cents per share. The stock moved more than 5% lower in after-hours trading on Wednesday following the results, but it regained ground during Thursday's session after analysts covering the stock came out more bullish than expected. (See also: Take-Two Stock Seen Rising 20% on E-Sports Demand.)

From a technical standpoint, the stock briefly broke out from prior highs made earlier this month but closed well below those levels by the end of the day. The relative strength index (RSI) remains lofty with a reading of 65.56, but the moving average convergence divergence (MACD) remains in a bullish uptrend. These indicators suggest that the stock could see some consolidation before resuming its uptrend over the medium term.

Traders should watch for a breakout from prior highs of around $117.50 toward 52-week highs of $129.25 made last year. If the stock breaks down from these levels, traders could see a move lower to retest the 200-day moving average at $106.18 or the 50-day moving average at $104.09. Key support levels below that lie at the psychologically important $100.00 level, where there is a long-term support trendline in place. (For more, see: Top Video Game Stocks for 2018.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.