I've followed THDO for many years and have played it well for the most part during that time, both long and short. I did sell "too soon" on Friday, though, and agree that it shouldn't be up here and will soon be a very strong short candidate.
I don't see it getting below $3, though. $4, yes. And likely soon. Too much of a runup. I still have no idea why this happened but would expect that with Friday's volume, some of it was short-covering, so it likely doesn't have as much of a short position to provide fuel for more days like that.
If they run out of money, Trip will just put more in like he's always done. I do keep asking myself just how deep his pockets are that he can afford to keep doing that though.
If it can bust $6, I'll be shorting it too. But would cover in the low 4's, high 3's. It seems to have established a new trading range in the $3.60 to $4.20 area.
As for Christmas being their make/break quarter, sadly that hasn't been the case. When they didn't get games out in time for Christmas last year, they said that consoles get bought for Christmas; games after Christmas. Sounded like rationalization to me.
I think the coming two quarters will be upside surprises. Their games do seem to be selling, based on my unscientific check of local retailers. I expect them to make it to Christmas, possibly with another cash infusion from their CEO (I don't see the need for more cash as a strong likelihood), then not need it anymore, but (and this is a big BUT) only if XBox doesn't blow PSX2 out of the water, as THDO has no games for XBox and apparently never will.
If XBox is a monster hit, short THDO and forget you ever did it. You'll never have to cover.
All that said, I do agree with your short target, but not the exit target. $6 to $5 is a lock. $6 to $4 nearly so. $6 to sub-$3 could be a very long wait. |
