Gravity falls to earth again!
The price of Gravity Ltd. (GRVY) stock has once again fallen to the same level as cash per share, so I’m a buyer again. If you’ll remember, I sold my position about 2 months ago for prices ranging from $3.00 to $3.45 a share (with an average price of $3.24). I had started that position in mid 2010 at prices ranging from $1.50-$1.70 and completed it last Fall for prices between $1.18 and $1.30. If anything, the operational situation today is better than it was when I started buying. Ragnarok 2 finally launched in Korea in February and will be introduced into first Japan then further abroad in the near future. Last quarter’s results were not bad with revenue increasing 15% YOY, though net income fell significantly due to an increase in marketing expenses associated with the introduction of Ragnarok 2. So what gives? Did everyone think that the impact of Ragnarok 2 would immediately translate into mucho Won to the bottom line, perhaps even without increased advertising? I certainly didn’t, and that’s why I sold out once the shares more than doubled between the Fall of 2011 and March 2012. After peaking at $3.47 in late March, the shares have gradually trended down and are now once again trading as if there was no upside beyond the $1.74 cash per share. That doesn’t make sense to me. I don’t know if the price will go lower from here. Mr. Market has shown that he is pretty crazy; Last Fall Gravity’s market capitalization was less than 2/3 of the cash it had in the bank! So I’m starting slowly and plan to grow the position if and when Mr. Market becomes even more manic.