Take-Two Interactive Software (NASDAQ:TTWO) has been on a hot run, thanks in part to renewed enthusiasm over the company’s next blockbuster title: Grand Theft Auto VI (GTA VI). The recently-landed GTA VI trailer went viral, and many folks are as excited, as they are impressed with what they saw.
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Though shares have risen considerably over the past few weeks, many analysts remain incredibly upbeat on the company’s prospects going into 2024, even though GTA VI isn’t expected to be released until 2025. It’s going to be a long 2024 for the GTA fanatics and shareholders of TTWO. Fortunately, I think there’s a lot to love about the firm if you’re willing to be a holder for at least three years.
You see, Take-Two may be a one- or two-hit wonder to some die-hard GTA gamers. That said, analysts and investors cannot ignore the company’s diversification efforts. Its Zygna acquisition hasn’t been a shot in the arm of Take-Two yet. But with a nice mobile gaming business to supplement smash-hits like GTA, I do view Take-Two as being slightly less dependent on its blockbusters.
TD Cowen analysts recently remarked on the strength of Take-Two’s “robust” pipeline, which extends the company’s strengths beyond the coming GTA VI.
In any case, GTA VI still seems to be the “make or break” for shares of Take-Two. The GTA VI trailer lived up to expectations, in my opinion. The scenes of Vice City’s (GTA’s fictional city) beaches, I thought, were most remarkable given the realistic water physics and charming NPC (non-player character) beachgoers. And given that GTA isn’t known to make trailers prettier than the actual game like some other companies, I do think investors should be willing to pay a premium price tag for shares post-trailer launch.
In my humble opinion, I believe that what you see is what you will get on launch day, and that makes me incredibly bullish, just like the many analysts covering the name.
GTA VI Looks Like an Early Hit and a Potential Disruptor
Indeed, it seems like GTA VI will be a truly next-generation experience — one that could capture a huge chunk of gamer hours come release day at some unknown date in 2025. Pending a delay or other unforeseen setback, it’s hard not to view GTA VI as a potentially disruptive title that could set new standards in the video game development world.
Of course, GTA is a very costly title that Take-Two developers have been working hard on for many years. With high costs comes great risk, but given Take-Two’s track record (most major GTA releases are incredibly successful), I’d say the company manages the risks of such an ambitious project far better than other game developers out there.
It’s this ambition and effective risk management that leads me to believe that Take-Two is the very best pure-play video game stock still on the public markets. Indeed, an acquirer would be lucky to scoop up the $26.8 billion company.
Additionally, major releases like GTA can be cash cows for many years following their release, as I noted in my previous piece covering TTWO. It’s not just about getting people to buy your game; it’s more about keeping users engaged and willing to open their wallets to additional in-game content. Whether we’re talking about DLCs (downloadable content) or cosmetic, in-game items, there’s a war going on for gamer’s attention and their wallets.
Gone are the days when gamers put down a game upon finishing the campaign (the main story). If GTA VI plays its cards right, it may very well steal the attention of most gamers across all sorts of different genres. In many ways, GTA is the ultimate must-play game for any type of gamer. For Take-Two’s gaming rivals, GTA VI is a serious competitive threat.
Is TTWO Stock a Buy, According to Analysts?
On TipRanks, TTWO stock comes in as a Strong Buy. Out of 19 analyst ratings, there are 16 Buys and three Hold recommendations. The average TTWO stock price target is $168.89, implying upside potential of 6.9%. Analyst price targets range from a low of $151.00 per share to a high of $195.00 per share.
The Bottom Line on TTWO
The only thing disappointing about the GTA VI trailer was the release year of 2025. It would have been nice to have the launch in 2024. But the company seems more focused on delivering a polished, quality title than running the risk of setting a deadline that’d entail anything short of perfection. The Take-Two standard is high, and for investors, I believe TTWO stock will be well worth the wait.
Raymond James thinks GTA VI is capable of posting some “big numbers.” I couldn’t agree more. In fact, “big numbers” may be a bit of an understatement if the blockbuster really lives up to the hype brought forth by its trailer.
