{"id":18842,"date":"2023-06-06T08:13:59","date_gmt":"2023-06-06T12:13:59","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/does-take-two-interactive-stock-have-room-for-growth\/"},"modified":"2023-06-06T08:14:00","modified_gmt":"2023-06-06T12:14:00","slug":"does-take-two-interactive-stock-have-room-for-growth","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=18842","title":{"rendered":"Does Take-Two Interactive Stock Have Room For Growth?"},"content":{"rendered":"
\n

Despite a 32% rise in Take-Two Interactive stock<\/strong> (NASDAQ
\n NDAQ
\n <\/fbs-ticker>: TTWO) this year, outperforming the broader S&P500 index, which is up 12%, we believe it has more room for growth. However, looking at a slightly longer term, TTWO stock is down 34% from levels seen in late 2020. This can be attributed to 1. <\/strong>the company\u2019s P\/S ratio falling a significant 43% to 4.4x<\/strong> trailing revenues, 2. <\/strong>a 49%<\/strong> rise in its average total shares outstanding to 169 million, partly offset by 3. <\/strong>Take-Two Interactive\u2019s revenue<\/strong> <\/strong>growth of 73%<\/strong> to $5.3 billion over the last twelve months. Our dashboard on Why Take-Two Interactive Stock Moved<\/strong> has more details.<\/p>\n

Take-Two Interactive\u2019s significant revenue growth can be attributed to its last year acquisition of Zynga, which has been seeing a steady rise in revenue over the past few years, led by its popular mobile gaming franchises, including Merge Dragons and Empires & Puzzles. Take-Two Interactive\u2019s big franchises, including Grand Theft Auto and NBA2K, have also been doing well. The company is expected to see a rise in sales driven by the continued expansion of Zynga\u2019s games and the much-awaited launch of Grand Theft Auto 6, likely to be released next year. Take-Two Interactive\u2019s revenue rose 53%<\/strong> y-o-y in fiscal 2023 (the fiscal ends in March). After a relatively calm fiscal 2024 (likely), sales are expected to surge 45% (per the consensus estimates) to over $8 billion in fiscal 2025, owing to the GTA 6 release. These numbers may optically appear to be high, but they make sense, given the popularity of this franchise. For perspective, GTA 5 has sold 180 million copies since its release in 2013, garnering close to $8 billion thus far. The new game in the franchise is likely to surpass this figure in fewer years.<\/p>\n

Although the company has been able to grow its sales, its operating margin has contracted to -22%<\/strong> in fiscal 2023, vs. 14%<\/strong> in 2020, due to higher marketing costs and some one-off costs related to the Zynga acquisition. Our Take-Two Interactive Operating Income Comparison<\/strong> dashboard has more details.<\/p>\n

<\/fbs-ad><\/p>\n

Looking at its stock price, we believe TTWO stock has more room for growth. At its current levels of $138, it is trading at 4.4x<\/strong> trailing twelve months revenue, compared to its last five-year average of 8.6x<\/strong>, implying it is undervalued. Our Take-Two Interactive Valuation Ratios Comparison<\/strong> dashboard offers more details.<\/p>\n

While TTWO stock may see higher levels, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you\u2019ll be surprised by the counter-intuitive stock valuation for Take-Two Interactive vs. Microsoft
\n MSFT
\n <\/fbs-ticker>.<\/p>\n

What if you\u2019re looking for a more balanced portfolio instead? Here\u2019s a high-quality portfolio<\/strong> that\u2019s beaten the market consistently since 2016.<\/p>\n

Invest with Trefis <\/strong>Market Beating Portfolios<\/strong><\/p>\n

See all Trefis <\/strong>Price Estimates<\/strong><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Despite a 32% rise in Take-Two Interactive stock (NASDAQ NDAQ : TTWO) this year, outperforming the broader S&P500 index, which is up 12%, we believe it has more room for growth. However, looking at a slightly longer term, TTWO stock is down 34% from levels seen in late 2020. This can be attributed to 1. 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