THQ has been under a lot of financial strain for what now seems like a very long time. The company has come close to being delisted from the NASDAQ Stock Market after poor stock performances and there has been concern that the publishing giant is in its death throes.
So I was surprised to see stories (here & here) popping up over the last 24 hours about THQ’s stock price rising 40%, and for a moment fell into the trap that this was the point that THQ’s fortunes would turn. However, this stock price rise is not going to last in the long term, and is more than likely a small period of growth before the price tumbles again a few days after the Humble Bundle sale ends.
You see THQ’s stock price currently sits at $1.40, which is an improvement over the low point of $1.07 but that figure is nowhere near the price THQ should be trading at to secure financial, and therefore operational, security. The $1.40 price tag isn’t even the highest the stock has closed at over the last month.
When WWE 13 was released, the stock price steadily climbed and reached $3.02 before falling dramatically. That means even though the price rose 40% in the last 24 hours, it isn’t even near the price stock was trading at just four weeks ago. I’m surprised that this high wasn’t reported widely, nor the fall that occurred afterwards. In fact if you click through to the THQ Stock chart you’ll see that all through October 2012 the price was almost at the $4 mark. Again, a figure that wasn’t reported.
The reason that the 40% rise was reported was because of the nature of THQ’s Humble Bundle. There are great games available for the average price of around $5, which has increased THQ’s overall sale figures as well as garnered exposure for titles that may have been overlooked the first time around, like Metro 2033. However, the price will likely fall after the Humble Bundle ends because of a gap in the publisher’s new releases.
THQ’s game portfolio and schedule isn’t in the best shape right now. Earlier this year the company lost the license for the UFC franchise, arguably one of the fastest growing sports franchises today, to EA. Guillermo Del Toro’s InSane game was also scrapped due to limited resources. THQ also had to settle with Adidas after failing to publish miCoach and breaking contractual obligations.
Couple those losses of licenses and finances with the fact that THQ’s release schedule is all but empty and you have a long term recipe for disaster. Both Company Of Heroes 2 and Metro: Last Light are expected at some point in early 2013, which will most likely give another temporary stock rise, but they aren’t Saint’s Row or WWE. In fact, unless Homefront 2 gets a summer release date, there isn’t anything major to tide the company over until Autumn 2013.
In the world of stock prices a day increase is nothing, not even a large-sounding increase like 40%. A year ago THQ was trading at $5. Four years ago that price was around the $30 mark. The fact that $1.40 is deemed good news isn’t a sign of recovery, but an indication of how the mighty have fallen.