TTWO Stock: Why Take-Two Interactive Is Up 6% Today?
Shares of gaming company,
Take-Two Interactive (NASDAQ:
trading 6% higher in pre-market trading today, at the time of
writing. Take-Two announced its fiscal fourth quarter of 2022
results (ended in March) yesterday and reported revenue of $930
million, an increase of 11% year over year, compared to sales of
$839.4 million in the year-ago period.
Its recurrent consumer spending
which is derived from add-on content and in-game purchases was up
1% and accounted for 63% of total sales. Its digitally-delivered
net revenue stood at $833.3 million, up 9% year over year,
accounting for 90% of sales.
The largest contributors to sales
were games such as NBA
as well as Grand Theft Auto Online and Grand Theft Auto V.
Take-Two also confirmed its net
income stood at $111 million or $0.95 per share, compared to a net
income of $218.8 million or $1.88 per share in the year-ago period.
Its adjusted earnings for Q4 were $1.16 per share, higher than
estimates of $1.01 per share, but lower than the year-ago earnings
of $1.44 per share.
Investors were buoyed as Take-Two
beat consensus earnings estimates in Q4, driving shares higher in
pre-market trading on May 17.
Take-Two Interactive is poised to deliver outsized
Shares of Take-Two Interactive
have returned 820% to investors in the last 10 years, easily
outpacing the S&P 500 which is up 265% since May 2012.
Despite its market-beating gains, TTWO stock is also down 48% below
all-time highs, allowing investors to buy the dip.
Similar to other gaming
developers, Take-Two also banks on a few popular franchises to
drive sales. Its most popular game is the Grand Theft Auto V or GTA V
which has sold more than 160 million
copies since its launch in 2013. The developers of
Grand Theft Auto
have focused on providing an
immersive experience to gamers and its online mode continues to
keep players engaged on the back of regular updates and new game
Take-Two has released graphically
updated versions of GTA
V on consoles and PC
devices. In addition to improvements in game-play, the fundamental
draw of video games has led to repeat purchases by players. The
company also released an updated version of GTA V on gaming consoles such as Xbox and PlayStation.
ItU+02019s quite possible for the new versions to sell millions of
copies and improve user engagement going forward.
In addition to
GTA other popular franchises include
Red Dead Redemption
and NBA 2K. Earlier this year, Take-Two announced the
acquisition of Zynga (NASDAQ: ZNGA)
which is a mobile gaming leader that owns titles such as
and Words With Friends. The acquisition should allow Take-Two to gain
traction in mobile gaming. It will also get access to expertise
related to the monetization of mobile titles for its own
What next for TTWO stock and investors?
Take-Two Interactive’s net
bookings stood at $3.4 billion in fiscal 2022 and expect net
bookings between $3.75 billion and $3.85 billion in fiscal
The company’s CEO and Chairman,
explained, “As we execute on our organic growth
initiatives, while unlocking new opportunities presented by our
pending transaction with Zynga, we believe that we can broaden our
portfolio and capitalize further on new platforms, business models,
emerging markets, and distribution channels. As we deliver on these
growth drivers, we believe that Take-Two remains incredibly
well-positioned to increase its scale and prominence in the
industry, expand its margins, and deliver long-term value for our
TTWO stock is valued at a market cap
of $12.7 billion and is forecast to increase revenue
by 16% to $4 billion in fiscal 2023.
Comparatively, its adjusted earnings might grow by 21% in the next
12-months. So, TTWO stock is valued at 3.2 times sales and 18 times
forward earnings which is quite reasonable. Analysts remain
optimistic and expect Take-Two shares to rise by 40% year over year
in the next 12-months.
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