Take-Two Interactive Stock Tumbles on Lowered Forecast, Game Delay

Take-Two Interactive Software Inc. (TTWO) fell more than 8% Friday after the company late Thursday reported fiscal third-quarter earnings that included a slip in net bookings and increased marketing costs. An announcement of a delayed, though unspecified new game release added to the negative sentiment.

For the three months ended Dec. 31, 2023, representing the company’s third quarter for fiscal 2024, Take-Two Interactive earned $1.34 billion in total net bookings, down 3% year-over-year. Major titles and franchises driving net bookings included “NBA 2K24,” “Grand Theft Auto,” “Toon Blast,” and the “Red Dead Redemption” series, the company said.

Recurring consumer spending coming from virtual currency, add-on content, in-game purchases, and in-game advertising declined by 7% year-over-year and accounted for 75% of total net bookings, Take-Two Interactive said. A net loss of $91.6 million (including a $53.4 million impairment charge) in the latest quarter amounted to a 54-cent-per-share loss, narrowing from the year-ago net loss of $153.4 million, or 91 cents a share.

Although sales of “NBA 2K24” were softer than anticipated, Take-Two projects lifetime net bookings for the title will be comparable to the figures for “NBA 2K23.” The company said it is set to release “WWE 2K24” on March 8, and to announce the launch date for tennis video game “TopSpin 2K25” in coming weeks.

In its earnings report, the company said a title initially slated for a fourth-quarter release in the current period ending March 31 would be delayed. Combined with weakness in the company’s mobile games advertising segment, these factors pushed the developer to reduce its guidance for fiscal 2024 full-year net bookings down to a range of $5.25 billion to $5.30 billion, from prior guidance of $5.45 billion to $5.55 billion.

The company said its mobile gaming unit Zynga found a late-quarter hit in “Match Factory!” and recorded better-than-anticipated totals for in-app purchases, thanks to the performance of “Toon Blast” and others. The success of “Match Factory!” prompted Take-Two Interactive to invest more heavily in marketing for the title, anticipating that lifetime value of the franchise would outweigh near-term pressure on profitability.

Analysts who follow Take-Two Interactive remain optimistic about the company’s long-term prospects. Analysts at Jefferies Equity Research suggest the stock will remain “range-bound” until the company gives investors more clarity on the release of “Grand Theft Auto VI,” the latest installment in the world’s best-selling video game franchise. Goldman Sachs analysts cited the company’s strong content pipeline as support for its “solid operating momentum” in the years ahead.

Take-Two shares finished Friday’s session down 8.6% at $154.91.