Home News Take-Two Interactive Stock Falls on Lower Forecast, Game Delay

Take-Two Interactive Stock Falls on Lower Forecast, Game Delay

by SuperiorInvest

Key takeaways

  • Take-Two Interactive Software Inc., the mobile game developer behind “Grand Theft Auto” and “Toon Blast,” lowered its fiscal 2024 guidance after its fiscal third-quarter earnings report.
  • Although Take-Two Interactive fell in net bookings last quarter and delayed the release of an unspecified game, analysts remain optimistic about its content portfolio.
  • Mobile gaming division Zynga continues to see success as it prepares to release games based on “Star Wars” and “Game of Thrones.”
  • Shares of Take-Two Interactive fell more than 8% on Friday following the release of results Thursday evening.

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

For the three months ended December 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. Top titles and franchises that generated net bookings included “NBA 2K24,” “Grand Theft Auto,” “Toon Blast” and the “Red Dead Redemption” series, the company said.

Recurring consumer spending from virtual currency, additional content, in-game purchases and in-game advertising decreased 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 loss of 54 cents per share, narrowing from the prior year’s net loss of $153. .4 million dollars, or 91 cents per share.

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

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

The company said its Zynga mobile gaming unit found success last quarter with “Match Factory!” and posted better-than-expected 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 in marketing for the title, anticipating that the lifetime value of the franchise would outweigh short-term pressure on profitability.

Analysts following 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 provides investors with more clarity on the release of “Grand Theft Auto VI,” the latest installment in the world’s best-selling video game franchise. . Analysts at Goldman Sachs cited the company’s strong content portfolio as supporting its “strong operating momentum” in the coming years.

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

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