The biggest question for Take-Two Interactive Software Inc. executives would be the same for gamers and Wall Street analysts: When is the next “Grand Theft Auto” going to drop?
Take-Two’s
TTWO,
blockbuster game is due for its first new iteration in nearly a decade, and Wall Street analysts have definitely taken note, even diving into hacked materials for earnings projections.
The last installment of GTA grew to become the most lucrative videogame in history, and Take-Two’s RockStar Games officially confirmed active development of the new version nearly a year ago, leading analysts to speculate it will appear in the company’s 2024 fiscal year, which begins in April.
Now, an analyst is looking for a trailer and release date — and maybe a stock bounce — by the start of summer.
B of A Securities analyst Omar Dessouky believes “markets could start to price in the inflection in May/June, around when we expect a GTA 6 trailer and initial release date to drop.” As Take-Two approaches the end of its 2023 fiscal year in March, he estimates that the launch of Grand Theft Auto VI will contribute about $4 a share to Take-Two’s EPS in fiscal 2025.
Dessouky, said he sees Take-Two as being “uniquely positioned” to grow earnings-per-share by about 70% over the next two years as “it launches the biggest pipeline in its history into the Gen 9 console installed base, which should eclipse the peak of the Gen 8 installed base by 2024.”
Take-Two executives could guide analysts more cautiously after third-quarter earnings on Monday afternoon, following disappointing delays in earlier years that happen across the industry. Electronic Arts Inc.
EA,
delayed the release of “Star Wars Jedi: Survivor” in its earnings report a week ahead of Take-Two.
Last quarter, Take-Two’s stock fell after the company lowered its bookings outlook because of weak mobile sales, a bit of a snag following the acquisition of Zynga earlier in the year. But this report will include holiday sales of the latest “NBA 2K” game, and the lowered outlook gives executives less of a bar to climb.
Read more: Take-Two stock sinks as analysts walk off mobile weakness, focus on pipeline
Cowen analyst Doug Creutz, who calls Take-Two his “top pick” of videogame publishers and has an outperform rating on the stock, said he doesn’t expect mobile trends to improve or worsen.
“Zynga continued to appear steady through the end of the quarter on a sequential basis (though still trending down [double digits on a percentage basis year over year]), so we don’t see any risk to guidance on that side,” Creutz said. “We think NBA 2K and GTA probably had OK but not great quarters; overall, we think management will maintain guidance for the [fiscal year].”
Take-Two’s stock price dropped 41.4% in 2022, but have rebounded 5% so far this year, while the S&P 500 index has gained 7.7% so far in 2023.
Read: Videogame sales heading for decline in U.S., but one analyst sees a 2023 rebound
