TryHard Holdings Limited (THH) shares took a beating Thursday morning, and the culprit appears to be a partnership announcement that investors are still trying to digest. The stock dropped 12.50% to $28.00 in premarket trading after the company revealed plans for an entertainment venture in Japan.

The Japan Entertainment Play

TryHard announced it signed a Memorandum of Cooperation with STAR PARTY HK LIMITED to explore creating a joint venture focused on developing the "Star Party" entertainment brand throughout Japan. The proposed venture would have registered capital of 90 million Japanese yen, with TryHard contributing 7.5 million Chinese yuan in cash for a 35% ownership stake. STAR PARTY would kick in the same amount but retain 65% equity in the arrangement.

The goal is to build entertainment venues across Japan while combining the management expertise and resources of both companies to strengthen the Star Party brand's strategic position. It sounds ambitious, though there's an important caveat: the memorandum is non-binding and still subject to further negotiations and regulatory approvals. Translation: nothing is set in stone yet.

The market's negative reaction might stem from uncertainty about capital allocation or concerns about international expansion risks. Sometimes investors prefer boring predictability over exciting growth plans.

Recent Funding Moves

TryHard recently entered into an Equity Purchase Agreement with Summer Explorer Investments that gives the company flexibility to sell up to $25 million worth of Class A shares over a 12-month period. As consideration for this arrangement, TryHard will issue 17,000 commitment shares and execute a Registration Rights Agreement to file a Form F-1 for resale registration of those shares, subject to standard conditions.

The Technical Picture Tells a Different Story

Despite Thursday's selloff, the longer-term chart for TryHard Holdings looks remarkably strong. The stock is trading 31% above its 20-day simple moving average and a whopping 83% above its 50-day moving average, suggesting powerful short-term momentum. Over the past year, shares have skyrocketed 431.56%, positioning the stock much closer to its 52-week highs than lows.

The technical indicators paint an interesting picture. The RSI sits at 56.68, which falls squarely in neutral territory, meaning the stock isn't technically overbought or oversold. Meanwhile, the MACD indicator is trading above its signal line, typically a bullish sign. The combination suggests momentum that's positive but not screaming in either direction.

Traders are watching two key levels: resistance at $30.00 and support at $25.00.

A High-Flyer With Questions

Market data shows TryHard scoring as a classic "High-Flyer" setup. The company's Value score comes in weak at just 0.84 out of 100, indicating the stock trades at a steep premium compared to peers. In other words, it's priced for perfection.

That's the tension investors face with TryHard: strong momentum battling against rich valuations and now uncertainty about international expansion. Thursday's price action suggests at least some shareholders decided to take profits rather than wait to see how the Japan story plays out.