NEW YORK - Take-Two (NASDAQ:TTWO) Interactive Software Inc. experienced a 2% decline in its stock price, closing at $154.21 Thursday, following analysts' feedback on the anticipated delay of "Grand Theft Auto VI" (GTA VI). Analysts from Bank of America (NYSE:BAC) revised their outlook for the game's publisher, shifting their rating to Neutral from Buy and setting a price target of $170.
The downgrade comes after Morgan Stanley (NYSE:MS) referred to GTA VI as Take-Two's most significant event in a decade, yet pointed out that the latest trailer indicated a delay, with a new expected release in 2025 instead of the previously forecasted 2024. BofA analysts' assessment aligns with this view, projecting the launch to occur in fall 2025, diverging from initial expectations of a March release.
This projected delay is poised to impact the company's financials significantly. The analysts cautioned that earnings estimates could be reduced by as much as 20% by August due to the postponed release and the uncertainty surrounding the game's quality, as inferred from recent trailers and last year's leaks. Additionally, they expressed concerns about investors' patience and noted the lack of any mention of a PC version slated for the 2025 release.
Despite these concerns and the recent downturn in stock price, Take-Two's year-to-date performance remains robust with a 50% increase. However, questions linger about GTA Online's revenue potential without more detailed insights into the upcoming game. As anticipation builds for one of gaming's most significant releases, stakeholders are closely monitoring Take-Two's next moves and the eventual market response to GTA VI.
InvestingPro Insights
Amid the market's reaction to the anticipated delay of "Grand Theft Auto VI," Take-Two Interactive Software Inc.'s financial metrics and analyst revisions provide a broader context for investors. The company's market capitalization stands at $26.23 billion, reflecting its significant presence in the gaming industry. However, the firm is currently trading at a negative price-to-earnings (P/E) ratio of -17.18, suggesting that earnings are not keeping pace with the company's valuation.
InvestingPro Tips highlight a declining trend in earnings per share and note that 12 analysts have revised their earnings downwards for the upcoming period. This aligns with the concerns raised by Bank of America analysts regarding potential earnings reductions due to the GTA VI delay. Moreover, the company's revenue growth has slowed down, with a quarterly decline of -6.77% as of Q2 2024. Despite these challenges, Take-Two has seen a high return over the last year, with a year-to-date price total return of 48.09%, underscoring the stock's resilience in the face of headwinds.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available, including insights into the company's debt levels, profitability forecasts, and valuation multiples. With a special Cyber Monday sale, subscribing to InvestingPro now offers up to a 60% discount. Plus, by using coupon code sfy23, investors can receive an extra 10% off a 2-year InvestingPro+ subscription, granting access to a wealth of data and expert opinions to inform their investment decisions.
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