Death is coming… for THQ?
Troubled publisher THQ looked to be doing better lately, but as we all know: looks can be deceiving.
The company posted its latest financials which show a massive loss of 21 million dollars. As a result of this, along with THQ’s announcement they’re pushing back the releases of several games, investors have been selling of THQ stock as if it was some sort of ebola virus. THQ’s shares dropped 46% which is the biggest loss the company made on stock price in years.
Disappointing sales of Vigil Games’ Darksiders 2 (1.4 million only up to now, with 2 million being the beak-even point), reports of proposed layoffs at the company, and the hiring of financial firm Centreview Partners to bring the company back to health, haven’t helped increase investor trust.
Meanwhile, Wedbush analyst Michael Pachter is seriously thinking that THQ’s current position might lead to eventual bankruptcy. He made the folliwing comment for investors:
“Should its financial position continue to deteriorate, we expect THQ to raise financing through an equity sale that could lead to dilution of existing shareholders We expect creditors to be asked to renegotiate terms at a discount; if they are unwilling, bankruptcy is possible.”
“Although THQ has been able to lower its cost structure through layoffs and a streamlined release slate in order to temporarily improve profitability, it is unlikely to return to profitability unless its revenues once again begin to grow.”
Of course, make investors afraid enough, and they’ll dump stock even further, creating a self-fulfilling prophecy. On the other hand: THQ has been all but a healthy company the last year.