Time to Buy Take-Two Interactive Stock

Video game maker Take-Two Interactive Software NASDAQ: TTWO stock has rallied off its lows of $101.85 but still trades down (-28%) on the year. The publisher of the infamous Grand Theft Auto series guided down fiscal 2023 EPS and net bookings. Net bookings are the net amount of products and services sold both digitally and physically and include licensing fees, merchandise, in-game advertising, strategy guides, and publisher incentives. The Company acquired Zynga on Jan. 9, 2022, with plans to exponentially increase mobile net bookings, which is the fastest-growing segment. Take-Two has certainly milked the Grand Theft Auto V franchise for nearly a decade with downloadable content (DLCs), online gameplay, events, and memberships. Grand Theft Auto V was re-released on next-gen PlayStation 5 and Xbox One to little fanfare as gamers see it as a blatant overpriced money grab. However, it did push sales through the 166 million unit mark. The world awaits any updates on the future Grand Theft Auto VI, which is over a decade in the making. Prudent investors seeking exposure in the gaming segment can look for opportunistic pullbacks in shares of Take-Two Interactive.

Q4 Fiscal 2022 Earnings Release

On May 16, 2022, Take-Two released its fiscal fourth-quarter 2022 results for the quarter ending March 2022. The Company reported an GAAP earnings-per-share (EPS) profits of $0.95 beating analyst estimates for $0.62, by $0.33. Revenues (net bookings) rose 7.8% year-over-year (YoY) to $845.78 million beating $884.62 million consensus analyst estimates. GAAP net cash provided by operating activities for the 12-months ending March 31, 2022, was $258 million. Fiscal full-year 2022 net bookings were $3.41 billion. Take-Two CEO Strauss Zelnick commented, “For fiscal 2023, we expect to deliver a new record of $3.75 to $3.85 billion in Net Bookings on a standalone basis. As we execute on our organic growth initiatives, while unlocking new opportunities presented by our pending transaction with Zynga, we believe that we can broaden our portfolio and capitalize further on new platforms, business models, emerging markets, and distribution channels. As we deliver on these growth drivers, we believe that Take-Two remains incredibly well-positioned to increase its scale and prominence in the industry, expand its margins, and deliver long-term value for our shareholders.”

Forward Guidance

Take-Two issued fiscal Q1 2023 GAAP EPS of $0.80 to $0.90 versus $0.22 consensus analyst estimates. Net bookings are expected between $700 million to $750 million. The Company expects fiscal full-year 2023 GAAP EPS of $1.90 to $2.15 versus $2.85 consensus analyst estimates. Full year 2023 net bookings are expected between $3.75 billion and $3.85 billion versus $3.96 billion analyst estimates.

Conference Call Takeaways

CEO Straus Zelnick stated that Take-Two is planning strategically for the long-term and added 1,000 new developers to bolster creative teams. The Zynga acquisition will grow its audiences, generate significant cost synergies, bolster net bookings, and provide reverse opportunities. NBA 2K22 has sold over 10 million units to date and exceeding last year’s totals. Engagement remained robust with average active days playing growing 6% and average games per user growing 13% YoY. Full year downloads of NBA 2K Mobile rose 25% YoY. WWE 2K22 sold more in the first four weeks of release than both WWE 2K19 and WWE 2K20. Customer engagement has been exceptional with over 140 million in-game matches play to-date with over 5.6 millions hours of WWE 2K22 content view on Twitch. Rockstar Games released Grand Theft Auto 5 remakes for both PlayStation 5 and Xbox Series X and S, bolstering its to-date total sales to over 165 million units. NBK 2K and Grand Theft Auto Online were the largest contributors to recurrent consumer spending. WWE SuperCard is 2K Games highest grossing mobile game with over 26 million downloads. The Company plans to release nearly 69 titles through fiscal 2025.

TTWO Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the playing field for TTWO shares. The weekly rifle collapsed from around the $194.48 Fibonacci (fib) level selling off to bottom near the $102.35 fib level and forming a weekly market structure low (MSL) buy trigger on a breakout above $127. The weekly downtrend is attempting a channel tightening with a rising 5-period moving average (MA) at $118.61 towards the falling 15-period MA at $137.52. The weekly 200-period MA sits at $142.66. The weekly stochastic crossed back up testing the 20-band. The daily rifle chart has been in a choppy uptrend with a rising 5-period MA at $126.19 and 15-period MA at $121.65 towards the 50-period MA at $130.56. The daily upper Bollinger Bands (BBs) sit at $139.09. The daily stochastic formed stairstep mini pups to stall at the 90-band for another high band mini pup or a peak. The daily lower BBs sit at $96.93. Prudent inverse can look for opportunistic pullback levels at the $118.49, $115.38 fib, $114.64 fib, $112.04, $107.43 fib, $102.35 fib, $97.51 fib, $92.81 fib, and the $88.78 fib level. Upside trajectories range from the $140.24 fib level up towards the $174.75 fib level.