Why Take-Two Stock Is Racing Higher

Investing

Published: November 8, 2023 10:40 am

Shares of Take-Two Interactive Software Inc. (NASDAQ: TTWO) jumped by as much as 9% in premarket trading Wednesday morning. The company announced on its official X site that a trailer for its next version of the Grand Theft Auto game would be released in early December.

The announcement was straightforward enough:

We are very excited to let you know that in early December, we will release the first trailer for the next Grand Theft Auto. We look forward to many more years of sharing these experiences with all of you.

After the company announced GTA V in late October 2011, the stock began a climb that didn’t end for more than 10 years. Through February 2021, Take-Two stock added more than 1,300%. (See which are the most followed video game franchises in the United States.)

Will history repeat itself?

Investors may not be expecting a similar growth path for the new version of the game, but why not place a bet that the stock will move higher once the game is finally released?

One reason is history. Take-Two did not actually release GTA V until September 2013, just over 10 years ago and almost 2 years from the official product announcement.

The company has not named an official release date for GTA VI, nor has it indicated when it might release the new version of the Grand Theft Auto game. That should give investors pause, but, as the saying goes, he who hesitates is lost.

This time is different

Bloomberg reported late Tuesday that sources told it that Take-Two’s Rockstar Games division plans to announce GTA VI as soon as this week. The source also told Bloomberg about the trailer’s release. That indicates that there’s little chance that the trailer’s release is being confused with the actual release of the game.

GTA V has sold more than 185 million copies since its release, making it the second-best-selling computer game of all time.

Take-Two earnings due after markets close

Take-Two reports second quarter fiscal 2024 results after markets close Wednesday. The consensus estimate from 25 analysts calls for revenue of $1.43 billion and adjusted EPS of $1.03.

In the prior quarter, the company reported a loss per share of $1.06 on sales of $1.2 billion. The per-share loss was down to $79 million in charges related to titles that were either canceled or remained unreleased.

Take-Two also issued downside guidance at the end of the first quarter. The company forecast a loss per share of $0.90 to $1.00 and revenue of $1.26 to $1.31 billion.

Despite the company’s rather dismal outlook, analysts remained buoyant, probably due to the release of GTA VI. Consumers have been waiting for 10 years for a new version of the Grand Theft Auto game. Analysts expect that pent-up demand to return the company to profitability.

Take-Two stock traded up by more than 7% shortly after Wednesday’s opening bell. The stock’s 52-week range is $92.l76 to $153.84.

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