Tuesday, June 25, 2024

Video Game Publisher Take-Two Guides Low For Year Ahead As ‘Grand Theft Auto 6’ Delayed

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Video game publisher Take-Two Interactive Software (TTWO) late Thursday beat estimates for its fiscal fourth quarter but missed views for the current fiscal year as the release date for key title “Grand Theft Auto 6” slipped into the following year. Take-Two stock fell in extended trading.


The New York City-based company earned an adjusted 28 cents a share on net bookings of $1.35 billion in the quarter ended March 31. Analysts polled by FactSet had expected adjusted earnings of 9 cents a share on net bookings of $1.31 billion. However, on a year-over-year basis, Take-Two’s adjusted earnings fell 53% while net bookings declined 3%.

For the current fiscal year ending next March, Take-Two expects net bookings of $5.55 billion to $5.65 billion. The midpoint of $5.6 billion is well below Wall Street’s target of $6.98 billion. In the just-finished fiscal 2024, Take-Two reported net bookings of $5.33 billion.

“Our outlook reflects a narrowing of Rockstar Games’ previously established window of calendar 2025 to fall of calendar 2025 for ‘Grand Theft Auto 6,'” Chief Executive Strauss Zelnick said in a news release. “We are highly confident that Rockstar Games will deliver an unparalleled entertainment experience, and our expectations for the commercial impact of the title continue to increase.”

Sequential Growth For Next Three Years

He added, “Looking ahead, we believe that our company is poised to achieve new levels of success, and we expect to deliver sequential growth in net bookings for fiscal 2025, 2026, and 2027.”

Take-Two attributed its net bookings beat in the March quarter to better-than-expected performance of “NBA 2K24,” the “Red Dead Redemption” and “Grand Theft Auto” series, and in-app purchases in mobile games “Toon Blast” and “Match Factory.”

Under generally accepted accounting principles, Take-Two lost $2.9 billion, or $17.02 a share, in the March quarter because of expenses related to layoffs and studio closures. In April, Take-Two laid off 5% of its staff, or around 600 workers, in a cost-cutting move. It also closed two game studios and canceled some unreleased games to improve its operations.

TTWO Stock Falls After Report

In an interview with Investor’s Business Daily, Zelnick said the actions were necessary to position the company for growth and improve future profitability.

“The industry in general and we in particular were a little fat and happy post-pandemic,” Zelnick said. “And the industry contracted on the mobile side and flattened out on the console side. Now we’re seeing the console and mobile (segments) returning to modest growth. But in the meantime, our structure got a little bit away from us. And we had to make some very hard decisions.”

In after-hours trading on the stock market today, TTWO stock dropped 2.5% to 142.45. During the regular session Thursday, TTWO stock fell 1.4% to close at 146.08.

Year to date, TTWO stock is down 9.2% through Thursday’s close. Take-Two shares sold off after the company delivered a disappointing fiscal Q3 report on Feb. 8.

For its fiscal first quarter ending June 30, Take-Two expects to break even on net bookings of $1.23 billion. Wall Street had been modeling adjusted earnings of 38 cents a share on net bookings of $1.25 billion. In the year-earlier period, Take-Two earned an adjusted 27 cents a share on net bookings of $1.2 billion.

Take-Two’s next major game release is “Star Wars Hunters” for mobile phones and the Nintendo Switch console on June 4.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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