Take-Two Interactive Software (NASDAQ: TTWO) turned a corner in 2022, which resulted in a 60% upswing in the stock price. The growth outlook is intact, but the Q4 results and 2025 guidance have reset the market. The problem is that the timeline for the release of Grand Theft Auto VI, the company’s flagship offering, was pushed out to early F2026 and significantly impacted the outlook for this year.
Take-Two isn’t in trouble; it is in excellent shape with a solid pipeline of new releases slated for the coming year. The problem is that investors hoped the rebound would accelerate this year, but it won’t, leaving the market in danger of extending the correction that began in February after the Q3 release. The takeaway for investors is that this is a 2nd chance to get into the rally that started two years ago, a rally that still has years to run.
Take-Two Has Solid Q4: Guides Weak for 2025
Take-Two had a decent quarter in Q4, with strengths in its key platforms that sustained the business despite the tough comp compared to last year. The $1.4 billion in net revenue is down 3.4% but edged past the consensus on strength in NBA 2K24, Zynga, and Grand Theft Auto. PC and Other Platforms were the weakest segment with a decline of 20%, 25% for bookings, offset by a much smaller decline in the others. Mobile was strongest, with a decline of -0.4% and a 0.3% increase in net bookings. Console sales fell by 2.5%, with bookings down 1.4%.
Booking was the weak link in the chain. Bookings are an indication of future revenue growth and fell by 3%. Within that, bookings from recurring customers fell by 2% and was 79% of the net. Booking weakness was seen again in the guidance for F2025 due to the delayed launch of GTQ6.
Guidance is good because revenue and bookings are expected to grow in 2025. The company also forecast revenue strength compared to the consensus reported by Marketbeat, but bookings are well below estimates. The company targets $5.6 billion in net bookings, which is $1.4 billion or 20% below the consensus. The good news is that bookings should accelerate as soon as Q1 F2026; however, that is still a long way off. Until then, earnings are good. The company’s GAAP loss widened due to significant non-cash charges and impairments; the adjusted $0.28 outpaced consensus by $0.20.
Analysts Trim Targets: Market Enters Wait-and-See Mode
The analyst's response to the Q4 results is favorable, but the group is trimming targets. The consensus Moderate Buy is unchanged, but the uptrend in the consensus price target is over, and the upside potential is capped. The first half-dozen revisions include Roth MKM, Jeffries, and Goldman Sachs updates. They all lowered their price targets to $175 to $180 to align with the broad market consensus. The consensus implies about 20% of upside but is below a critical resistance point that will likely cap gains until there is more clarity on GTA6 and bookings growth.
Take-Two Interactive's share price edged lower following the release and may move lower in the near-term. However, analysts and institutions support the market well, so the downside is limited. The low end of the analysts' expected range is unchanged and above the current price action at $147. In this scenario, the market for Take-Two is undervalued and setting up for a rebound that could begin later this year. The targets for critical support are near $140 and $130. A move below $130 could take this market down to the $100 level, but that is not expected for this tech stock.
