Gaming’s Most Anticipated Title Could Fuel Take-Two
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6.9% deficit is projected for 2026, and 5.3% for next year
6.9% deficit is projected for 2026, and 5.3% for next year, as the effect of tax cuts and higher pensions build up while one-off expenditures fall out in 2027
FX - Technical Analysis
A few days ago, the dollar began a minor correction against its counterparts. To speak of a sustained reversal, we need to see even more well-established reversal patterns. After a long period of stability, signs of a reversal in the forint’s movement have been appearing for a week now; we’re seeing a structural shift against the dollar, while the curve against the euro still has some way to go before a reversal occurs. Against the yen, the dollar has reached the 162.5 level. The EUR/CHF exchange rate is also trending upward, and no pattern indicating a short signal has yet emerged.
Take-Two, one of the leading players in the video game market, could have a breakout year after launching the next installment of its hugely successful GTA franchise in November — following a 13-year wait — which could not only provide a one-time revenue boost but also take the company’s earnings potential to a new level in the long term. Despite the unprecedented interest surrounding the game, management continues to issue conservative forecasts, which, in our view, leaves room for upward revisions to profit expectations in the coming quarters. The expected earnings momentum could be further supported by the ramp-up of the GTA 6 marketing campaign and improving investor sentiment, therefore we are adding Take-Two shares to our Equity Top Pick list.
Company Overview
Take-Two Interactive is a leading player in the global video game industry, developing and distributing video games for console, PC, and mobile platforms. The company comprises three key publishers. 2K, whose portfolio includes premium sports and simulation franchises, led by the NBA 2K series. Zynga, which the company acquired in 2022 and which provides a significant market presence in the rapidly growing mobile gaming segment. And Rockstar Games, home to the company’s most valuable intellectual property, including the Grand Theft Auto (GTA) and Red Dead Redemption franchises.
One of the most important features of its business model is the high rate of recurring consumer spending, which comes from in-game transactions, subscriptions, and other services. This revenue stream can account for as much as 80% of total revenue. Geographically, the United States is the most important market, accounting for approximately 60% of total sales, while the remainder comes from international markets. In terms of platform breakdown, approximately 50% of revenue comes from mobile platforms, 40% from console sales, and 10% from PC games, although the share of the latter two could increase significantly around the time of major game releases.
The consolidation that has taken place in the industry in recent years has put Take-Two in a favorable strategic position. Several major video game developers and publishers have become acquisition targets (Activision Blizzard, Electronic Arts), leaving Take-Two as one of the last independent game publishers on the stock market today with a globally significant portfolio of AAA-category (blockbuster) franchises. Consequently, investors have a limited number of alternatives available for building capital market exposure to premium video game franchises. This relative scarcity may even justify a premium valuation for Take-Two’s shares compared to its industry peers.
Investment case
The company plans to release GTA 6 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 6 could exceed the market consensus estimate of 33–35 million copies for the current fiscal year. According to our estimates, this could result in revenue that is up to approximately 5% higher and EPS that is more than 20% higher at the corporate level compared to current expectations, which points to strong earnings momentum for the remainder of the year. In addition, improving investor sentiment could support this fundamental revaluation as the GTA 6 marketing campaign kicks off this 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.
Taking all of this into account, we are adding Take-Two shares to our Equity Top Pick list.
Valuation
In the short term, growth prospects are bolstered by the release of GTA 6, 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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