Why GTA VI should be Take-Two Interactive’s biggest hit of all time (NASDAQ:TTWO)

Take-Two Interactive (NASDAQ:TTWO) This week’s Grand Theft Auto VI trailer broke the record for the most viewed YouTube video in its first 24 hours, with 122 million views to date, already surpassing the 2011 GTA V trailer.

I own TTWO for about 10 years and wrote optimistically This was in 2017 when the stock price was $58. This was a few months before the release of the western-themed Red Dead Redemption 2. Since then, RDR2 has proven to be a hit and attention has turned to the release of GTA VI, currently scheduled for 2025. In 2017, the scale was larger due to the popularity of armed robbery games. Much better selling titles.

Lucia, a Latina career criminal and GTA’s first female driver, is featured several times in trailers from TTWO subsidiary Rockstar Games. she she is Write a great review. While the commenter is writing the comment In the report While it was suggested that the game would be burdened with “political correctness”, it seems Lucia was designed for non-PC reasons – being a glamorous knockout like Eva Mendes. According to the leaker, the male partner named Jason is some sort of Ryan Gosling type.

The public was fascinated by the sight of a young couple driving around while committing armed robbery. Bonnie Parker and Clyde Barrow have been the subject of 10 movies and are still famous 89 years after the shooting. Lucia and Jason fit the “Bonnie and Clyde dynamic.” Players will try to make sure their stories don’t end the same way.

YouTube reviewers found the graphics amazing, especially the way sunlight acts on hair, and noted the many car customization options that give it a run for its money. A side-by-side comparison of the graphics showed improved realism compared to GTA V.

When to release

However, there was a negative surprise as the company unveiled “COMING 2025.” This means it won’t be ready for next year’s holiday season. TTWO’s financial forecasts show that the Xbox Series X and Sony PlayStation 5 will be released before the end of fiscal 2025 on March 31. But the vagueness of the 2025 date leaves room for a slide until the holiday season, nearly two years from now. In the case of RDR2, the PC version followed the console version 12 months later, but GTA VI has so many detailed animations that it may take longer.

Fiscal 2025 bookings projections decreased slightly from over $8 billion to just below that. Shares fell 5% in pre-market trading on Tuesday, but quickly recovered thanks to the trailer’s overwhelming popularity and positive reviews. A Bank of America report on Thursday predicted the launch would be delayed until the end of 2025, but predicted it would stabilize.

Morgan Stanley expects adjusted earnings to more than double from $3.15 in the current fiscal year to $8 in 2025 and $8 in 2026, with higher-than-baseline incremental sales leading to significant revenue growth.

How Inventory Affects Releases

GTA V, released 10 years ago, is beneficial. Launch was expected in 2012, but when launch was delayed, the stock price (TTWO) fell from the $16 range to around $8. Since then, it has steadily risen, peaking at $19 a month before its actual release in September 2013. The stock fell to $16 by November, then began a long rally due to strong selling.

I’ve owned TTWO for about a decade and wrote optimistically about it in 2017, anticipating the release of the western-themed Red Dead Redemption 2 later that year. Once again, the release has been delayed until October 2018. During this period, the stock price rose, reaching $136 just prior to launch. It then pulled back and hit another peak during the COVID-19 lockdowns of 2020. Lacking a significant catalyst in its results and the waning of gaming’s quarantine boom, it was weak over the next two years and, despite recent gains, was still at a discount of around 25% from its highs.

cause of danger

The main risk is delays, as with the GTA V and RDR2 releases. In both cases, the sell-off occurred as announced delivery dates were delayed. If Rockstar is unable to produce a game in 2025 for whatever reason, investors can expect a steep decline.

The second risk is that you will need to raise capital to cover huge pre-launch costs, for example having to hire highly paid animators to meet deadlines. This may increase the debt burden or result in equity dilution.

The third risk is problems elsewhere in the company, such as low forecasts for net bookings at acquired mobile games maker Zynga in 2022. Management discussed this in a recent earnings call, but didn’t see it as anything major. .

There’s also a risk that the game won’t become one of the best-selling games in gaming history. But I don’t think that’s likely. GTA V comes in second place with 190 million units sold, which is significantly higher than previous GTA releases, behind Mojang’s Minecraft with 300 million units. The franchise’s audience skews more male than the game in general, but GTA VI’s improved graphics and Bonnie and Clyde vibe will appeal to both men and women, so ultimately beating that number seems like a good bet.

At some point, all this optimism will come at a cost. My research on popular product introductions shows that it’s very unlikely to happen until just before launch, right before launch. In the meantime, I will be looking for dips to boost my position.