Interest in GTA VI Is Already Massive
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On Friday, before the market opened, Take-Two, one of the world’s largest video game distributors, released its quarterly earnings report. The company reported revenue and profit figures for the quarter just ended that slightly exceeded preliminary expectations. However, it did not revise its full-year guidance, which may cause some disappointment given the hype surrounding the upcoming release of the video game GTA VI this year, although management’s comments indicate extremely strong demand for the game. In our view, management’s conservative approach continues to suggest significant upside potential for the stock.
We continue to maintain Take-Two on our Equity Top Pick List
Earnings report
The company’s net bookings totaled $1.39 billion during the quarter just ended (-2.6% YoY), slightly exceeding expectations of $1.37 billion. The decline was primarily due to weakness in Zynga’s mobile gaming segment, which management had anticipated due to increasing competition for new users. However, the long-term outlook for the division remains positive. In contrast, revenue from console games rose 11% during the quarter, exceeding expectations, primarily due to continued strong sales of the NBA 2K and GTA game series.
The online mode of the most recent GTA installment, released 13 years ago, still has nearly 18 million monthly active users, making the game one of the most popular console titles even more than a decade after its release. This points to strong user engagement and a massive fan base, which bodes well for the upcoming release of the next installment in the series, GTA VI, scheduled by the company for November 19 of this year. Based on management’s comments, initial data from pre-orders, which began in late June, point to “unprecedented and astonishing” demand. Newzoo estimates that the game could generate between $3.3 billion and $5.2 billion in revenue by the end of November, while management’s current forecast indicates a significantly lower revenue projection of approximately $2 billion.
At the same time, however, the company has not revised its annual forecast, which may come as a slight disappointment to investors. Management explained that it is currently difficult to assess to what extent the current strong demand reflects purchases brought forward due to the hype surrounding the game, and whether GTA VI will be able to sustain this level of demand after its release. Since pre-orders can be canceled and do not yet generate revenue on their own, management is taking a wait-and-see approach for now, though it remains cautiously optimistic based on the data received so far. According to the company, pre-order trends are significantly exceeding all of their previous internal estimates. In our view, management’s conservative stance continues to imply significant upside potential for the remainder of the year.
Overall, results that moderately exceeded expectations, combined with an unchanged forecast, paint a neutral or even slightly negative picture, as we had expected the annual forecast to be raised. However, driven by positive comments from management, the stock closed Friday’s trading session up 6%, which may suggest that the current valuation primarily reflects the conservative scenario outlined by management. As such, we continue to view the stock’s outlook positively and are maintaining it on our Equity Top Pick list with a $300 price target.
Investment case
The company plans to release GTA VI this year, which is one of the most anticipated releases in the video game industry. The previous installment in the franchise was released in 2013, but even in 2025, it remained among the most popular console games based on monthly active users. Interest in the new game is exceptional, as evidenced by the fact that views of the first two trailers significantly exceeded the levels seen for previous blockbuster video games, while related online community activity — particularly on Reddit — has been extremely high even months before the release. All of this suggests that the game’s debut may be accompanied by significant market attention and strong initial demand.
Nevertheless, management’s communication remains subdued. The company has historically taken a conservative approach to sales forecasts, and this year’s outlook does not fully reflect the strong interest in the product. In our view, the current guidance can be considered cautious, especially in light of the franchise’s previous episode’s sustained market dominance, the series’ significant market share at launch, and the current size of the global video game market.
Based on this, we believe that sales of GTA VI could exceed the market consensus estimate of 33–35 million copies for the current fiscal year. Based on our estimates, this could result in double-digit revenue and EPS growth at the company level compared to current expectations, which points to strong earnings momentum for the remainder of the year. In addition, improving investor sentiment could support the fundamental revaluation as the GTA VI marketing campaign kicks off at the end of the summer with new trailers and promotional content. The expected intense media coverage could keep the company in the spotlight, which could serve as a further catalyst for the stock.
In the case of similarly successful blockbuster games, game developers’ stock prices have risen by an average of 18% in the six months leading up to release. Another potential catalyst is that there is currently little concrete information available about the game’s online mode, while in the longer term, this segment could become the most important source of profit due to in-game purchases and subscription revenue. Future announcements and details regarding this could therefore have a further positive impact on the stock price over the next year.
Valuation
In the short term, growth prospects are bolstered by the release of GTA VI, as a result, current expectations indicate that revenue growth could average around 15% annually over the next three years, while profit growth could reach 50%. In the longer term, however, the growth trajectory is expected to moderate and will increasingly depend on how effectively the company can monetize the GTA VI online ecosystem and maintain player engagement in the years following the release. In terms of valuation, the stock trades at a slight premium compared to competitors (next year’s EV/EBITDA: 18.8, while P/E is 24.3), as well as compared to video game developers acquired in recent years, where transactions were completed at an NTM EV/EBITDA multiple of 18–19. However, this is justified by favorable growth and expanding margins in the coming years.
Key risks
The risks posed by AI are also relevant to Take-Two, particularly with the advancement of generative game development tools. These risks may primarily threaten smaller development studios with weaker brands, as AI could make it increasingly easy to create simpler games. In contrast, Take-Two owns premium franchises such as GTA and Red Dead Redemption, which are built on strong brand value, complex narratives, and high development budgets, so they are expected to be less exposed to this risk in the short and medium term. However, AI-related market fears at the beginning of the year caused a nearly 20% correction in the stock price, which created more favorable valuation levels.
Additional risks include a potential delay in the release of GTA VI, sales figures falling short of expectations, and a faster-than-expected return to normal levels of revenue and profit in the years following the game’s release. In addition, in the mobile gaming market—where barriers to entry are lower — AI-generated competition could intensify, which could threaten the long-term growth prospects of Zynga’s business segment.
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