Friday, November 30, 2012

What a Humble Bundle Can do for you Share Price

Humble's latest bundle is not very indie comprising a bunch of AAA titles from developer THQ. The internet being the internet is awash with comments both positive and negative. The negatives are complaining because THQ isn't an indie, beause the games have DRM, because the games won't run on Linux and because hey  it's the internet, people complain about everything. The positive's are just generally happy that such a great bunch of games is being made available so cheaply. It really is a solid gold bundle by the way and if you don't have any of these games I recommend snapping it up immediately.

Some of the more reflective commenters are talking about the fact that THQ hasn't been doing very well financially in recent times (despite making some excellent games) and wondering if this move smacks of inspiration or desperation on the company's behalf. Whatever the motivation behind it the move appears to be a big success pulling in $2 million in less than a day of its two week run.

What I find most surprising about it all though is the impact on THQ's share price which was languishing around 1.1 before the release of the bundle but jumped very quickly to 1.3 yesterday and at one stage peaked above 1.7. What on earth is going on here? How do investors even know about the Humble Bundle and how did they know it was going to be a success? The leading news article today on that Google page I linked to is an article from GamersDailyNews damning THQ and suggesting that stockholders may be in for a significant dilution of their holdings. Yet the stock price is soaring.

I don't know how modern stock trades work and I have no idea what drives a share price to rise so rapidly. I think the graphs are saying that the total number of shares being traded is in the hundreds of thousands so if this is correct the total amount of money being spent on shares is not huge and one or two clued in investors could single handedly be responsible for the blip.

3 comments:

Tesh said...

It's my (limited) experience that such rapid and significant swings aren't really sustainable anyway. If THQ is able to ride it to a new big project, that might be great for them, but from a stock market perspective... it looks to me like someone may well get burned for their enthusiasm.

...but now I'm wondering if the spike comes from internal employee investment, as I'd think they would know about the 'bundle, too.

mbp said...

Are you allowed buy shares in your own company.Doesn't that count as insider trading?

Jayedub said...

I think the bundle is a great thing and maybe well see other big publishers doing something similar. If I didn't already own all of the games in the THQ bundle, I would pony up the money to buy it myself.