Zumba Kids: Will Investors Follow Majesco Entertainment Into Newest Venture?

Small video game company Majesco Entertainment (COOL) has seen its shares drop 42% in 2013. The drop comes off of earnings misses and lowered guidance. The gaming company, popular for its Zumba Fitness line of games, is trading for around $0.60 a share. Can two new gaming updates send shares back above $1.00?

On Friday morning, Majesco Entertainment announced its plans to launch "Zumba Kids" for the XBOX 360 Kinect and Nintendo Wii. The game will target kids ages 7 to 12. Mini-games and dances feature over 30 songs, including hits from Justin Bieber and Willow Smith.

The game has a chance to be successful for Majesco Entertainment. "Zumba Kids" will potentially have a cool factor among kids, as the "Dance Central" games have proved popular with children. The game could also be a good gift idea from parents, as it represents a way for kids to possibly lose weight. There are millions of overweight kids in America. The game could get the blessing from healthcare organizations if it can get kids off the couch and playing a movement based game.

"Zumba Kids" will be released during the holiday season, which could also help propel sales. The game pairs nicely with the latest Zumba Fitness game, "Zumba Fitness World Party". "Zumba Fitness World Party" will be released in October for XBOX One, XBOX 360, Nintentdo Wii, and the Nintendo WiiU.

Weeks ago, Majesco Entertainment announced its "Zumba Dance" game for the iPad and Android based tablets. Available for $4.99, the game is one of the best-selling health and fitness games in over 45 countries. The tablet version is similar to the console game and offers 20 to 60 minute workouts, tracks calories, and also helps users find live classes nearby.

The new kids game doesn't solve the problem of Majesco's dependence on the Zumba Fitness line. However, the game does help expansion of the franchise into new markets. The two new console games and tablet based version offer excitement to the stock. Strong sales of each of these products could lead to a revenue and earnings beat for the fiscal year. Any positive news and sales movement could send shares back over $1.

Analysts expect Majesco Entertainment to post a loss of $0.15 per share in fiscal 2013. Revenue is expected to decline 48.7% to $132.3 million. As you can see, analysts aren't expecting much from the company. If any of these games surprises or posts strong sales, Majesco investors could be in for a wild ride upwards. In fiscal 2014, the company is expected to post a profit of $0.01 with revenue returning to $84.0 million. Majesco is a great speculative stock going forward with a high risk high reward opportunity going into the 2013 holiday season.

*Disclosure-Author Owns Shares of COOL at Time of Writing*

THQ Raises Earnings Guidance and Stock Soars

Just a short time ago, THQ Incorporated (THQI) received a delisting notice from the Nasdaq if it could not maintain a price above a $1 a share. Shares have not seen a $1 since December of 2011 but appear destined to hit the key share price after upbeat earnings from the company.
The fourth quarter loss will now be smaller than the company and analysts once projected. The net loss is expected to now be in the $0.10 to $0.20 range. Previously, the loss was predicted to be in a range of $0.35-$0.50. Net sales will now be reported as $160-$170 million versus projected $130-$150 million.
Saints Row: The Third sales greatly increased once the company did several price cuts to attract buyers. The uDraw segment has weighed down shares and hurt revenue. Stronger sales of the UFC Undisputed game also helped the earnings beat. A blog post I wrote back in January highlighted the new UFC game and the company’s potential. Here’s a look at sales of some recent releases:

North America/Europe/Japan/Rest of World/Total

UFC Undisputed 3 XBOX 360 0.36million 0.08 million 0 0.04 million 0.49 million

UFC Undisputed 3 PS3 0.28 million 0.12 million 0.01 million 0.06 million 0.48 million



Saints Row 3 XBOX 360 0.89 million 0.92 million 0.03 million 0.22 million 2.07 million

Saints Row 3 PS3 0.55 million 0.69 million 0.09 million 0.28 million 1.62 million

Saints Row 3 PC 0.07 million 0.11 million 0 0.03 0.21 million



Sales figures from www.vgchartz.com


Earnings will now be reported on May 15th and this could lead to an increased share price once guidance for the rest of the year is reported. An update on the game release schedule could also push shares back over $1. The company will also report $76 million in cash balances. Along with its cash balance, the company still maintains a $50 million level of credit that can be utilized to release several games in 2012 and 2013.

The company will likely update the status on the highly anticipated Darksiders II game. The game will be a follow-up to 2010’s Darksiders, which sold close to a million copies on the XBOX 360 platform. The company’s recent UFC game is also helping earn the company additional revenue with downloadable character packs, including the recent International Fighters pack. The WWE games also have made extra money from downloadable character packs. In my recent blog post, I also mentioned how the company was expanding into social gaming including UFC and Margaritaville.



The fifty two week share price of the company is a wide $0.45-$4.67. Shares once traded for over $35 a share. I bought shares of this stock under $1 as I believe the company is producing enough money from several minor hits to keep its studio going. New releases will power the company further along or will lead to a buyout. A buyout is also very realistic as larger Take Two (TTWO), Electronic Arts (EA), or Activision (ATVI) looks to strengthen its portfolio and will gain the Saints Row, Darksiders, and UFC brands as well as others. I remain bullish on shares of THQI and think they are worth buying below a $1 a share.

*Disclosure - I own shares of THQI and ATVI