Take-Two (TTWO) AI Stock Analysis

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Take-Two

(NASDAQ:TTWO)

62Neutral

Take-Two's stock score reflects significant financial challenges, especially in profitability and cash flow. However, strong technical indicators and an optimistic earnings call outlook provide a positive counterbalance. The negative valuation metrics weigh down the score, but anticipated game releases and core franchise strength offer potential for future improvement.

Positive Factors

Future Growth Prospects

The upcoming release of highly anticipated titles like Grand Theft Auto 6 is expected to drive growth and margin expansion.

Revenue Growth

Strong sales of NBA 2K25 and legacy titles like GTA V and Red Dead Redemption 2 are leading to solid Q3 revenue.

Valuation and Analyst Recommendation

Analyst maintains a BUY rating with an increased 12-month price target of $270, driven by high growth prospects and large upside opportunities.

Negative Factors

Monetization Challenges

Slower than expected monetization ramp-up of new games could lead to increased marketing expenses and impact earnings.

Sales Cannibalization and Delays

The current release line-up could result in sales cannibalization or delays, potentially pressuring the stock in the near-term.

Take-Two (TTWO) vs. S&P 500 (SPY)

Market Cap

$36.73B

Dividend YieldN/A

Average Volume (3M)1.87M

Price to Earnings (P/E)―

Beta (1Y)0.87

Revenue Growth1.00%

EPS Growth-148.89%

CountryUS

Employees12,371

SectorCommunication Services

Sector Strength98

IndustryElectronic Gaming & Multimedia

Share Statistics

EPS (TTM)-21.33

Shares Outstanding176,495,710

10 Day Avg. Volume2,231,549

30 Day Avg. Volume1,865,982

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)6.91

Price to Cash Flow (P/CF)-1962.30

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$223.05

Price Target Upside7.17% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering19

Take-Two Business Overview & Revenue Model

Company DescriptionTake-Two Interactive Software, Inc. develops, publishes, and markets interactive entertainment solutions for consumers worldwide. The company offers its products under the Rockstar Games, 2K, Private Division, and T2 Mobile Games names. It develops and publishes action/adventure products under the Grand Theft Auto, Max Payne, Midnight Club, and Red Dead Redemption names; and offers episodes and content, as well as develops brands in other genres, including the LA Noire, Bully, and Manhunt franchises. The company also publishes various entertainment properties across various platforms and a range of genres, such as shooter, action, role-playing, strategy, sports, and family/casual entertainment under the BioShock, Mafia, Sid Meier's Civilization, XCOM series, and Borderlands. In addition, it publishes sports simulation titles comprising NBA 2K series, a basketball video game; the WWE 2K professional wrestling series; and PGA TOUR 2K. Further, the company offers Kerbal Space Program, OlliOlli World, and The Outer Worlds and Ancestors: the Humankind Odyssey under Private Division; and free-to-play mobile games, such as Dragon City, Monster Legends, Two Dots, and Top Eleven. Its products are designed for console gaming systems, including PlayStation 4 and PlayStation 5; Xbox One; the Nintendo's Switch; personal computers; and mobile comprising smartphones and tablets. The company provides its products through physical retail, digital download, online platforms, and cloud streaming services. Take-Two Interactive Software, Inc. was incorporated in 1993 and is based in New York, New York.

How the Company Makes MoneyTake-Two generates revenue through the sale of its video game products across various platforms, including console, PC, and mobile. The company employs a diverse revenue model that includes both the sale of physical game copies and digital downloads. In addition to direct sales, Take-Two earns money from in-game purchases, downloadable content (DLC), and microtransactions, which are prevalent in its popular titles like Grand Theft Auto Online and NBA 2K. Recurring consumer spending on virtual currency, add-on content, and other in-game items forms a significant portion of its revenue stream. Furthermore, the company benefits from licensing and merchandise sales related to its game franchises. Strategic partnerships and collaborations, such as those with sports leagues for its NBA 2K series, also play a role in enhancing its market presence and revenue opportunities.

Take-Two Financial Statement Overview

Summary

Take-Two's financial performance is challenged by negative profitability and cash flow trends, despite a relatively stable balance sheet. The income statement reflects significant losses with a negative net profit margin and stagnant revenue growth. Cash flow analysis highlights liquidity issues with negative free cash flow. This indicates critical areas needing improvement.

Income Statement

Neutral

Take-Two's income statement shows significant financial challenges, with a notable decline in profitability. The TTM (Trailing-Twelve-Months) reflects a negative net profit margin of approximately -67.1%, indicating substantial losses. Revenue growth has been stagnant, with only a slight increase from the previous year, which is concerning given the competitive industry. Both EBIT and EBITDA margins are negative, further highlighting operational inefficiencies.

Balance Sheet

Neutral

The balance sheet indicates a moderate financial position with a reasonable debt-to-equity ratio of approximately 0.18, suggesting manageable leverage. However, the decline in stockholders' equity over time points to potential challenges in value retention. The equity ratio stands at 45% for the TTM, indicating a stable asset base funded by equity. While there is some resilience, the overall decline in assets and equity over recent periods is a concern.

Cash Flow

Neutral

Cash flow analysis reveals liquidity issues, with negative free cash flow in the TTM, reflecting cash outflows exceeding inflows. The operating cash flow to net income ratio is negative, which is troubling as it indicates operational cash deficits. The free cash flow growth rate is negative, underscoring a downward cash flow trend, which could hinder future investments and operations.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
5.45B	5.35B	5.35B	3.50B	3.37B	3.09B
	Gross Profit
2.85B	2.24B	2.29B	1.97B	1.84B	1.55B
	EBIT
-318.90M	-3.59B	-1.13B	473.60M	629.38M	425.27M
	EBITDA
-1.78B	-1.80B	656.80M	690.56M	876.29M	697.62M
	Net Income Common Stockholders
-3.66B	-3.74B	-1.12B	418.00M	588.90M	404.46M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
297.12M	776.00M	1.01B	2.55B	2.73B	2.00B
	Total Assets
976.60M	12.22B	15.86B	6.55B	6.03B	4.95B
	Total Debt
105.31M	3.53B	3.49B	250.22M	191.27M	177.25M
	Net Debt
-191.81M	2.78B	2.66B	-1.48B	-1.23B	-1.18B
	Total Liabilities
357.51M	6.55B	6.82B	2.74B	2.70B	2.41B
	Stockholders Equity
619.09M	5.67B	9.04B	3.81B	3.33B	2.54B
Cash Flow		Free Cash Flow
-494.60M	-157.80M	-203.10M	99.34M	843.39M	632.29M
	Operating Cash Flow
-333.10M	-16.10M	1.10M	257.98M	912.32M	685.68M
	Investing Cash Flow
-143.40M	-28.20M	-2.88B	139.22M	-806.72M	4.05M
	Financing Cash Flow
608.80M	-91.40M	1.93B	-256.81M	-57.34M	-77.45M

Take-Two Technical Analysis

Technical Analysis Sentiment

Positive

Last Price208.13

Price Trends

50DMA

205.66

Positive

100DMA

195.47

Positive

200DMA

175.07

Positive

Market Momentum

MACD

2.06

Positive

RSI

52.47

Neutral

STOCH

39.76

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TTWO, the sentiment is Positive. The current price of 208.13 is above the 20-day moving average (MA) of 207.85, above the 50-day MA of 205.66, and above the 200-day MA of 175.07, indicating a bullish trend. The MACD of 2.06 indicates Positive momentum. The RSI at 52.47 is Neutral, neither overbought nor oversold. The STOCH value of 39.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TTWO.

Take-Two Risk Analysis

Take-Two disclosed 48 risk factors in its most recent earnings report. Take-Two reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Take-Two Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTES	79 Outperform	$54.40B	14.46	22.60%	2.82%	0.23%	-0.09%
EA	74 Outperform	$35.08B	34.26	14.04%	0.57%	-2.99%	-0.46%
BILI	66 Neutral	$6.30B	―	-9.43%	―	17.42%	72.64%
TTWO	62 Neutral	$36.73B	―	-51.45%	―	1.00%	-148.89%
PLTK	62 Neutral	$1.85B	11.33	-220.61%	8.81%	-0.69%	-31.96%
Sector *	58 Neutral	$27.01B	3.11	-10.53%	4.44%	2.30%	-43.13%
RBLX	54 Neutral	$35.05B	―	-628.33%	―	28.68%	22.57%

* Communication Services Sector Average

Performance Comparison

TTWO

Take-Two

208.13

56.01

36.82%

Electronic Arts

136.58

7.96

6.19%

NTES

NetEase

93.76

-3.03

-3.13%

BILI

Bilibili

15.88

4.20

35.96%

PLTK

Playtika Holding

4.94

-1.64

-24.92%

RBLX

Roblox

57.31

17.51

43.99%

Take-Two Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: 13.68% | Next Earnings Date: May 19, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong performance in key segments such as NBA 2K and the promising outlook with upcoming major game releases. However, concerns were raised regarding challenges in the mobile market and the impact of shifting operating expenses. Overall, the sentiment is positive due to the anticipated releases and strong position in core gaming franchises.

Highlights

Strong Performance of NBA 2K

NBA 2K delivered a phenomenal quarter with recurrent consumer spending up over 30%, daily active users up nearly 20%, and monthly active users up nearly 10%. The title sold over 7 million units and exceeded expectations significantly.

Launch of Major Titles

This year is set to see the launch of major titles including Sid Meier's Civilization VII, Mafia: The Old Country, Grand Theft Auto VI, and Borderlands 4, which is expected to have a transformative effect on the business.

Record Franchise Performance

Grand Theft Auto V has sold over 210 million units worldwide. GTA Online continues to perform well with membership growth for GTA Plus increasing 10% year-over-year.

Positive Outlook for Future Fiscal Years

The company is confident in achieving record levels of net bookings in fiscal 2026 and 2027.

Expansion in Mobile Sector

Zynga's Match Factory is on track to become its second-largest title by the end of this fiscal year. Tune Blast and Toy Blast delivered double-digit growth.

Lowlights

Mobile Market Challenges

Mobile growth was below expectations with only 6% increase instead of the low double-digit growth forecasted, primarily due to underperformance in the hyper-casual mobile portfolio and Empires and Puzzles.

Shift in Operating Expenses

A shift in timing of expenses from the third to the fourth quarter is expected to affect fourth-quarter performance.

Company Guidance

During the Take-Two Interactive Software, Inc. third quarter fiscal year 2025 earnings call, the company highlighted several key metrics and forward-looking guidance. The company reported net bookings of $1.37 billion, within their guidance range of $1.35 to $1.4 billion, driven by strong performance in the NBA 2K franchise, which saw over 7 million units sold and a 30% increase in recurrent consumer spending. For fiscal 2025, the company reaffirmed their net bookings guidance of $5.55 to $5.65 billion, projecting a 5% growth over the previous year. NBA 2K, Grand Theft Auto series, and several mobile titles are anticipated to be the largest contributors. Recurrent consumer spending is expected to grow by 5%, while mobile is expected to see low single-digit growth. They also noted upcoming releases, including Grand Theft Auto VI and Borderlands 4, which are anticipated to drive record levels of net bookings in fiscal 2026 and 2027. The call also revealed a geographic net bookings split of 60% U.S. and 40% international, with a breakdown by labels of 49% Zynga, 34% 2K, and 17% Rockstar Games.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.