GTA VI Launches in 10 Days, and Take-Two's Forecast Might Be Too Low. Is the Stock a Buy Before Nov. 19?

Take-Two Interactive (NASDAQ:TTWO) is 10 days away from the most anticipated video game launch in years, and its stock can't decide how to feel about it.

Shares fell 3.5% to $207.40 on Monday before the company reported quarterly results, then rose about 4% in after-hours trading. Even with that bounce, the stock is down about 18% this year and well below its July high of $265.94.

The report gave investors something to cheer and something to worry about.

Image source: Getty Images.

Record Pre-Orders, but No Forecast Raise

"The launch of Grand Theft Auto VI is ten days away and, with pre-orders continuing to reach unprecedented levels, we expect to deliver an historic year for our company," CEO Strauss Zelnick said in the after-hours earnings release, yet Take-Two didn't raise its outlook. It still expects $8 billion to $8.2 billion in net bookings, its main sales measure, for the fiscal year ending March 31, 2027, which is the same range it gave in May.

Bookings also fell 18% to $1.60 billion last quarter, but that's not as bad as it sounds. The company's quarterly filing says the drop came mainly from last year's launches of Borderlands 4 and Mafia: The Old Country, plus weaker NBA 2K and mobile results.

Why the Forecast Looks Cautious

Do the math, and the outlook looks conservative. Take-Two booked $2.99 billion in the first half of the year and expects $3.35 billion to $3.5 billion in the quarter that includes GTA VI's launch. That leaves $1.51 billion to $1.86 billion for January through March.

The same quarter a year earlier, with no GTA VI, brought in about $1.58 billion. In other words, the forecast assumes GTA VI adds little in its second through fourth months on sale.

Management also has a habit of guiding low. Last fiscal year, it started with a forecast of $5.9 billion to $6.0 billion, raised it three times, and finished at $6.72 billion.

And GTA games sell for years. Grand Theft Auto V, released in 2013, has sold more than 230 million units, according to the filing.

The Risks

GTA VI has already been officially delayed twice, from fall 2025 to May 26, 2026, and then to Nov. 19. Investors and fans alike have been fearing another delay, but the firm put those concerns to rest on Monday, with CEO Strauss Zelnick telling IGN the game wouldn't be delayed again and thereby taking a big risk off the table.

Still, the stock isn't cheap. Take-Two expects earnings of just $0.57 to $0.75 per share this year, weighed down by accounting charges tied to past acquisitions and stock-based pay. That puts the stock at more than 275 times the top of that range, so investors are effectively paying for the years after launch.

Cash is tighter heading into launch, too. Operations used $173.5 million in the first half, compared with $83.7 million generated a year earlier, though Take-Two expects more than $1 billion for the full year.

Is Take-Two Stock a Buy?

Among video game stocks, Take-Two may have the clearest catalyst for the next year. GTA brought in only 12.6% of net revenue in the first half, so the company isn't a one-game business, but GTA VI will shape the next few years.

If launch sales match the pre-orders, today's forecast could prove too low, just as last year's did. Investors worried about a sell-the-news dip could buy in stages before and after Nov. 19.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Take-Two Interactive Software. The Motley Fool has a disclosure policy.