Investors in Take-Two Interactive Software will have to wait longer for the highly anticipated release of Grand Theft Auto VI, which has now been pushed to next year. Nevertheless, this delay has not dampened enthusiasm for the company’s stock.
Shares are trading just shy of a record high, despite the announcement regarding the sixth installment of the iconic franchise. The excitement surrounding other upcoming titles, particularly Borderlands 4, continues to bolster investor confidence in Take-Two’s future prospects.
Portfolio manager Alec Boccanfuso of Gabelli Funds noted, “You can’t categorize the entire gaming sector as being in a defensive position, but Take-Two seems resilient, as the impact of tariffs is negligible. The strength of its game lineup suggests that new content will outweigh any potential negatives.” Boccanfuso identifies Take-Two as one of his top holdings.
The company made headlines earlier this month by postponing the launch of Grand Theft Auto VI, a decision that caused a brief drop in share prices. Nevertheless, this pre-announced delay may mitigate potential risks in upcoming financial results. Take-Two remains optimistic about its revenue trajectory, indicating expectations for increased net bookings in fiscal years 2026 and 2027.
Market analysts anticipate Grand Theft Auto VI to be one of the decade’s most significant releases, projecting it could generate approximately $2 billion in revenue within its first year. Despite the rescheduled release, Wall Street analysts still regard Take-Two as a strong contender in a volatile market landscape.
Boccanfuso expressed understanding, stating, “While I wished for GTA VI to debut this year, the immense pressure surrounding its release makes a delay more prudent. It’s better for the company to perfect the game than risk negative feedback from an unsatisfactory user experience. Although the game’s launch has been postponed, expected revenue has not disappeared, and the firm’s forecast on bookings should maintain investor interest until its release.”
Take-Two’s stock has risen approximately 27% this year, ranking it among the top performers in the Nasdaq 100 Index. The gaming sector, in general, has shown resilience amid market fluctuations, with a Goldman Sachs index indicating that video game publishers have seen a surge of over 30%, in stark contrast to the Nasdaq 100’s modest gains of 2%.
On Thursday, Take-Two shares increased by 1.5% as the company prepares for its fourth-quarter financial report, which is expected to reveal a revenue increase of around 15%, accompanied by a near doubling of net earnings compared to the previous year.
Following the announcement of the game’s delay, analysts have adjusted their projections for 2026 downwards. According to data compiled by Bloomberg, net earnings expectations have fallen by about 32%, while revenue forecasts have decreased by approximately 5.4%. As a result, the stock appears more expensive, currently trading around 32 times the estimated earnings compared to a 10-year average of 26 and EA’s multiple of 18.
Nevertheless, revenue growth for Take-Two’s fiscal 2026 is still forecasted to approach 40%, a significant increase from just over 5% this year.
Analyst Michael Pachter from Wedbush expressed a positive outlook for Take-Two, stating that the company’s pipeline of high-profile games positions it well through 2027, despite the delay.
The anticipation for Grand Theft Auto VI remains high, bolstered by the recent release of a new trailer, which has provided some recovery for the stock price following the delay announcement.
Industry Resilience
Ahead of Take-Two’s earnings report, competitors have highlighted the industry’s potential as a safe haven during turbulent times. Electronic Arts Inc. recently reported stronger-than-expected projections for net bookings, while Roblox Corp. also posted impressive results, indicating that the gaming sector is not significantly affected by broader economic challenges.
Roblox’s stock has surged by 37% this year, whereas EA’s marginal increase of 0.6% reflects previous weak results leading to a drop in January. However, EA has rebounded by 26% from its lows in that month.
Take-Two is currently the most favored among major U.S. gaming companies, with over 90% of analysts recommending it as a buy, compared to nearly two-thirds for Roblox and just above 40% for EA. However, its valuation closely aligns with the average analyst price target, suggesting limited short-term upside potential at this time.
Nate Miller, vice president of product development and management at Amplify ETFs, remarked, “The stock’s performance this year indicates positive expectations for the upcoming report, yet it remains a compelling value proposition. While we want to confirm a firm release date for the game, a quality product is paramount over rushing to market. The stakes are high due to the existing hype surrounding Grand Theft Auto.”
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(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
