Video game maker Take-Two Interactive Software rode optimism of a forthcoming installment of its hugely popular “Grand Theft Auto” franchise to a 19-month high share price Tuesday, earning a significant analyst upgrade in the process.
Take-Two’s stock gained as much as 3.7% to over $156, hitting its highest intraday price since last April, settling to a more modest 2.2% gain for the day.
Shares are now up 13% and Take-Two’s market valuation is up $3 billion since its subsidiary Rockstar Games announced last week it will release a trailer in December for the sixth “Grand Theft Auto,” promising the first title in the no-holds-barred adventure series since 2013.
Tuesday’s rally came after Deutsche Bank analysts led by Benjamin Soff raised their recommendation for Take-Two stock from a hold to a buy, primarily citing upside associated with the new “Grand Theft Auto.”
The upcoming game “represents a transformative multi-year growth opportunity” for Take-Two, according to Soff, predicting any further information about “Grand Theft Auto” should be a “catalyst” for the stock and upping his 12-month share price target for Take-Two from $155 to $175, implying about 15% further upside from Tuesday.
What To Watch For
When the next “Grand Theft Auto” will actually come out. Soff said the timing of the trailer indicates the sixth installment will come out during the company’s 2025 fiscal year, potentially as early as the end of 2024. Bank of America analyst Omar Dessouky said last week he sees “no evidence to the contrary” that the game will come out during the firm’s 2025 fiscal year, which ends in March 2025.
Take-Two’s stock jump outpaces the broader market’s scorching stretch and the stock performance of fellow video game firms Electronic Arts, Nintendo and Sony. The hype comes as a much-needed boon for Take-Two, which has posted six consecutive quarters of negative net income. But predictably, analysts forecast the impending release of “Grand Theft Auto” to coincide with an explosion in Take-Two’s performance. Average estimates forecast Take-Two to bring in $7.9 billion of revenue and $1.8 billion of earnings before interest, taxes, depreciation, and amortization, according to FactSet, dwarfing the $5.3 billion of sales and $351 million of profit it brought in its latest fiscal year. NBA 2K and Red Dead Redemption are among the other games Take-Two makes.
190 million. That’s how many “Grand Theft Auto V” copies Take-Two has sold over the last decade, according to the company. That makes it the third best-selling video game ever, trailing only Tetris and Minecraft, according to IGN.