Tuesday's Market Minute: Take-Two After Earnings

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Take-Two Interactive’s third quarter beat expectations yesterday, reporting EPS of $1.24 and revenue of $903.3 million. Net bookings grew 6% in the quarter, 88% of which were from digital sales. The largest contributors to its net bookings were Grand Theft Auto titles; last Friday, shares of TTWO jumped after it announced it was actively working on GTA VI. It will also release GTA V on the newest generation of consoles, the PlayStation 5 and Xbox Series X, March 15. The franchise has sold over 355 million copies, with GTA V still selling well despite originally releasing in 2013. 

However, Take-Two’s CEO said on the earnings call that the industry is no longer “seeing enhanced demand due to the pandemic” after guidance disappointed the Street. Due to the semiconductor shortage, there are also shortages of new consoles, though Sony says over 17.3 million have been shipped as of December 2021. The new GTA game isn’t expected by analysts for at least another year, which gives supply chains more time to work through difficulties – and the popular franchise could spike demand for the consoles again.

Either way, a Benchmark analyst thinks the game could lead to “explosive growth” for the company. Investors should keep an eye on more news from the franchise, but also watch supply chain issues for the consoles: if people can’t play the game at launch, it could lead to disappointment.

Image sourced from Pixabay

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.