Why Take-Two Interactive Stock Is Sinking Today

Take-Two Interactive (NASDAQ: TTWO) stock is falling in Thursday's trading. The video company's share price was down 2.7% as of 12:50 p.m. ET amid the backdrop of a 0.1% gain for the S&P 500 index and a decline of 0.4% for the Nasdaq Composite index.

Take-Two is losing ground today after fellow gaming-industry player Electronic Arts (NASDAQ: EA) published preliminary results for the third quarter of its current fiscal year, which ended Dec. 31. EA also issued revised guidance for its full fiscal year. Wall Street isn't happy with the update, and it's having a spillover effect for Take-Two stock.

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Take-Two stock falls on EA's disappointing update

EA stock is seeing big sell-offs on the heels of its preliminary Q3 report and guidance revisions. As of 12:50 p.m. ET, the company's share price was down 16.7% in the daily session.

EA said it now expects revenue for its third quarter to come in at roughly $1.883 billion. Earnings for the period are projected to come in at roughly $1.11 per share. Meanwhile, the company lowered its guidance for live services bookings for the fiscal year to a mid-single-digit decline -- down from its previous target for mid-single-digit growth.

The company primarily attributed the shift in guidance to softer-than-expected performance for its Global Football segment, although a substantial engagement drop-off for the company's Dragon Age: The Veilguard also caused the title to underperform and impact overall sales. With EA serving up results and guidance that came in well below expectations, investors are seeing warning signs for the gaming industry and selling out of Take-Two stock today.

What's next for Take-Two stock?

While EA's recent update could be a bearish indicator for the broader gaming industry, it could be a mistake to read too deeply into the report when it comes to Take-Two stock. For starters, EA's big underperformance really came down to just two titles. EA Sports FC 25 appears to be underperforming in part because the series no longer has the FIFA license. Meanwhile, Dragon Age: The Veilguard may have simply been out of touch with what gamers were looking for.

Take-Two is still seemingly on track to release Grand Theft Auto VI this year, and the title looks poised to be a massive success. Disappointing results for key releases from EA should not be taken as an indication of the kind of backdrop Grand Theft Auto VI will be launching into. If you were considering building or adding to a position in Take-Two stock, today's pullback could be a buying opportunity.

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Keith Noonan has positions in Take-Two Interactive Software. The Motley Fool has positions in and recommends Take-Two Interactive Software. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.