Take-Two Shares Drop After Grand Theft Auto VI Delayed Again

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by Tyler Durden
Friday, May 17, 2024 - 12:30 PM

Take-Two Interactive Software fell in premarket trading in New York after lowering its fiscal 2025 bookings forecast on Thursday evening and announcing a release date for Grand Theft Auto VI in the autumn of 2025. Some Wall Street desks viewed the release date as a "delay." 

Take-Two now expects fiscal 2025 bookings between $5.55 billion and $5.65 billion, down from the Bloomberg estimate of $6.92 billion.  

Here's a snapshot of the 2025 outlook:

  • Sees net bookings $5.55 billion to $5.65 billion, estimate $6.92 billion (Bloomberg Consensus)
  • Sees adjusted EPS $2.34 to $2.59, estimate $5.86
  • Sees adjusted Ebitda $746 million to $800 million, estimate $1.23 billion

Besides the outlook, Wall Street analysts focused on Take-Two's Rockstar Games release of GTA6. Some desks say this date is considered a "delay." 

Morgan Stanley, Matthew Cost (overweight)

  • The delay to Grand Theft Auto VI removes a "major overhang" from the shares, which Cost says had weighed on the stock since 3Q results in February
  • Not surprised by limited EPS growth in the guidance, though notes management had "pointed to a significant planned increase in marketing around Zynga titles, which we would hope to see generate meaningful incremental profitability in FY26"

Raymond James, Andrew Marok (outperform)

  • Results came slightly ahead of expectations, though Take-Two put the "final nail in the coffin" for expectations of Grand Theft Auto VI releasing in FY25
  • "The new FY25 guide suggests seven immersive core titles: the already-released TopSpin 2K25, the dependable iterations of NBA 2K and WWE 2K, a new iteration of a sizable 2K franchises (we estimate Civilization VII), and three others (one of which we expect is PGA Tour 2K25)"

Citi, Jason Bazinet (buy)

  • The Grand Theft Auto date "will place the release in FY 2026 and likely be the main driver behind today's lower FY 2025 outlook"
  •  "Some investors might view this latest GTA VI delay as a clearing event for the stock, limiting potential downside"

Deutsche Bank, Benjamin Soff (buy)

  • While Grand Theft Auto VI has been delayed, the long-term opportunity in the stock remains intact
  • Bookings outperformance during 4Q was driven by strength from NBA 2K24, Take-Two's mobile business and GTA

Bloomberg Intelligence, Nathan Naidu and Kevin Tsao

  • "Take-Two's updated launch timing for Grand Theft Auto VI means its release will take place after end-fiscal 2025, overshadowing its fiscal 4Q consensus earnings beat"
  • "Net bookings in fiscal 1Q ending June is expected to grow by a low-single digit, as a full quarter from new games offsets softness in the GTA franchise's multiplayer game, with likely upside from the completion of Gearbox acquisition"

Vital Knowledge

  • The outlook is "downbeat" but the company is "still upbeat on sales growth over the coming years, and "this optimism should help mitigate the knee-jerk slump that will accompany the F25 guide"

Goldman's Eric Sheridan laid out the positives and negatives:

  • Positives: a) Strong in-period operating performance as FQ4 bookings and profitability exceeded the high-end of mgmt’s guide and beat GSe/Street driven by the outperformance of NBA 2K24, Zynga IAP, Red Dead Redemption, and GTA;b) GTA VI release date window narrowed to Fall 2025 (FY26, from CY25 prior) with mgmt. expectations continuing to increase around the release due to the strong performance of the franchise as GTA V exceeded 200mm lifetime units sold-in with growing engagement (audience +35% YoY in FY24); & c) Mgmt. maintained its expectation of growth in the year following the release of GTA VI with net bookings guided to positive sequential growth through FY27.

  • Negatives: a) FY25 net bookings revised meaningfully lower to $5.6bn midpoint (from $7bn+ prior) reflecting the narrowing of the release window of GTA VI (FY26) with some impact from other pipeline movements and announced cost actions; b) Meaningful reduction in the size of the pipeline (now 40 titles FY25-FY27 from prior 52 titles FY24-FY26) as TTWO refocuses its resources towards its highest potential titles and eliminated several projects; & c) FY25 Adj. unrestricted OCF guided to $(200)mm (vs. prior GSe of nearly $900mm) reflecting ongoing investments and lower net bookings.

This is not the first time analysts have feared delays

Some gamers have been waiting a decade for GTA 6. 

Take-Two shares have surged in recent quarters on the anticipation of the GTA 6 release. Shares have hit resistance between the $160-$170 levels. In premarket trading, shares are down 2%. 

"We do feel highly confident that we'll deliver [Grand Theft Auto VI] in fall of 2025," Take-Two CEO Strauss Zelnick told video game website IGN when asked about rumors GTA 6 could be delayed into 2026.