When video game publisher Take-Two Interactive Software delivered better-than-expected sales and earnings for the September quarter, all Wall Street analysts wanted to talk about was news of the company's blockbuster franchise, "Grand Theft Auto."
But Chief Executive Strauss Zelnick played it cool.
"There will be more detail coming from (GTA game studio) Rockstar in due time," Zelnick told Investor's Business Daily on Wednesday. "However, to say that I'm excited and enthusiastic is an understatement."
Zelnick doesn't deal in hyperbole. He lets the company's top and bottom lines do the talking.
In the company's fiscal second quarter ended Sept. 30, Take-Two earned an adjusted $1.22 a share on net bookings of $1.44 billion. Analysts had been looking for earnings of $1.03 a share on sales of $1.43 billion. Take-Two also forecast earnings above estimates for the current quarter and full year.
'Grand Theft Auto' Games Have Legs
But there's a reason why the spotlight was on "Grand Theft Auto." And why Zelnick is excited. The franchise is Take-Two's flagship property and primary wealth creator, after all. The current game, "Grand Theft Auto 5," came out in 2013 — and it's still selling well.
Zelnick called GTA 5 "the definition of long tail."
"It is 10 years out and the title is up to 190 million units (sold) and remains profitable on an ongoing basis," he said.
In addition, the company has a thriving business in its "Grand Theft Auto Online" game and "GTA Plus" subscription service.
Take-Two announced Wednesday that the trailer for the next GTA game will be released in early December. The company did not announce a release date, but analysts expect the game to come out in Take-Two's fiscal 2025, which starts in April 1. Fans refer to the game as "Grand Theft Auto 6," which is the likely title.
The new crime-themed, action-adventure game is rumored to take place in a fictional version of Miami, featuring two protagonists, a male and a female.
Take-Two Stock Gets Price-Target Hikes
At least eight Wall Street analysts raised their price targets on Take-Two stock after the company's earnings and GTA 6 game announcement.
Morgan Stanley analyst Matthew Cost reiterated his overweight rating and hiked his price target to 175 from 160. A key reason: the excitement over the new "Grand Theft Auto" game. Take-Two stock ended the regular session Thursday at 146.32.
Take-Two's "announcement that there will be a 'GTA 6' trailer in early December is a key step towards the most important catalyst TTWO (Take-Two stock) has seen in a decade," Cost said in a client note.
The company also is rolling out GTA 6 at a time when there's a large installed base for current-generation gaming consoles. Supply-chain constraints that became a headache in recent holiday seasons for video game consoles — including Sony's PlayStation 5 and Microsoft's Xbox Series X and Series S — are no longer an issue.
"The installed base for Gen 9 (ninth-generation consoles) is now substantial and post-Christmas it will be even more so, because it appears all the supply-chain issues have been addressed," Zelnick said.
Take-Two also is banking on other major franchises, including "Red Dead Redemption" and "NBA 2K." Plus, it has popular mobile games like "Empires & Puzzles," "Toon Blast" and "Words with Friends."
Zelnick is also optimistic about three recently released mobile games: "Power Slap," "Top Troops" and "Match Factory."
The mobile games market has stabilized this year after a down year in 2022, he said. And Take-Two's new offerings look promising. "So far, the metrics are excellent," he said.
AI Could Speed Game Development
Meanwhile, Zelnick is bullish about a major trend: artificial intelligence. Generative AI technology, he said, can potentially improve the way games are produced.
"Anything that makes it easier or more efficient to create great titles will benefit us and probably our competitors as well," he said. "The more mundane activities will become more efficient. That means that our very talented people will be able to focus on more interesting, high-level things."
Generative AI is also expected to make gaming more engaging for players. "You can count on dialogue becoming more personalized," he said.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
