GTA VI Is Days Away: Don't Expect GTA V-Style Returns From Take-Two Stock at 5.7 Times Sales

Investors who bought shares of Take-Two Interactive (NASDAQ:TTWO) after Grand Theft Auto V (GTA V) launched in September 2013 made about 35% in one year, 163% in three, and 673% in five. A $1,000 investment made on the day it was released would have turned into more than $13,000 in 2026.

GTA VI arrives Nov. 19, and CEO Strauss Zelnick says preorders are "tracking far in excess of our initial expectations." The stock bounced after Nov. 9 earnings. But before chasing the bounce, investors should consider what's already priced into the stock's valuation as of Nov. 9.

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Take-Two is set up for a record year

Management expects fiscal 2027 (ending March 31, 2027) to be "an historic year." It reiterated guidance for net bookings -- the value of games and content sold -- of $8 billion to $8.2 billion, up about 21% from last year.

GTA V has sold nearly 235 million units worldwide over the last 13 years, a testament to the size of the franchise’s audience. This tees up GTA VI to sell into a larger installed base of players, which is contributing to the game's strong preorder trends so far.

The stock already prices in strong sales

When GTA V launched in 2013, Take-Two shares traded at about 1.4 times trailing sales. At the Nov. 9 close, it traded at 5.7 times fiscal 2026 revenue -- more than 4 times higher.

In 2013, investors paid no premium for a game that hadn't yet shown up in sales. Today, they're paying up before GTA VI has even launched.

What a repeat of GTA V's returns would require

It seems like too much to ask for the stock to match the returns after GTA V's release in 2013. For the stock to deliver the same returns, Take-Two's market capitalization (share price times shares outstanding) would have to climb from today's $39 billion to $102 billion in three years and $300 billion in five.

Assuming the stock still trades at 5.7 times sales, revenue would need to reach about $17.5 billion in three years and $51.5 billion in five.

But analysts don't expect anything close to those figures. The Wall Street consensus has revenue reaching $9.4 billion by fiscal 2029. At the Nov. 9 close, that's about 4.1 times fiscal 2029 estimates, which isn't cheap.

A quality video game stock, but don't expect GTA V-style returns

The biggest risk is that GTA VI is a huge hit but still fails to live up to high expectations in the years following its launch. Take-Two depends on Grand Theft Auto and other hit titles, and a premium valuation leaves little room for disappointment.

To be fair, Take-Two expects over $1 billion in operating cash flow and net cash instead of net debt by the end of the fiscal year. It's on track to report impressive numbers, but valuation matters. That still puts the stock at about 39 times forward cash flow, which implies a lot of growth.

At these valuation levels, I wouldn't buy the post-earnings bounce. With growth already priced in, I would wait until Take-Two reports holiday sales for the December quarter next year. That way, investors can avoid the possibility of a negative surprise that tanks the stock and make an investment decision based on actual post-launch game sales rather than guesswork.

John Ballard 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.