Mixed results cause a drop, then a rise, in Take-Two’s share price
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Mixed results cause a drop, then a rise, in Take-Two’s share price

Take-Two Interactive, developers and publishers of market-leading video game franchises like Grand Theft Auto and Red Dead Redemption reported a mixed bag of earnings this week that sent its share price down sharply. Then up sharply. Why the indecision? Well, the company missed pretty dramatically on earnings – but it beat on revenue, and its underlying business looks as strong as ever!

Take-Two Interactive’s share price went down, then up, after earnings: +10% in the last 30 days

16 05 taketwo

Source: Yahoo Finance

Here’s the low-down: earnings missed by a substantial figure. Take-Two reported earnings of 50c per share – the Street had hoped to see earnings of 75c per share. However, it beat on sales, which came in at $539.007 million – a $32.54 million overshoot against consensus estimates. A further two metrics which speak to the health of Take-Two’s underlying business, however, have helped to push the share price higher early in the week. The company said total net bookings over the quarter were up 19% year on year, and digitally-delivered net bookings outpaced that advance, growing 26% over the same period. In other words, Take-Two’s business is growing and becoming more increasingly digitised.

Summing up performance and looking to the future, Take-Two CEO Strauss Zelnick said: "For the full fiscal year, our Company delivered record Net Bookings and Adjusted Operating Cash Flow, which exceeded our outlook at the start of the year, along with strong earnings growth driven by the record-breaking launch of Red Dead Redemption 2, the outstanding performance of NBA 2K, and better-than expected results from Grand Theft Auto Online and Grand Theft Auto V. We expect fiscal 2020 to be another strong year for Take-Two, with operating results currently forecasted to be lower than fiscal 2019, due to the extraordinary success of Red Dead Redemption 2, and growing as compared to fiscal 2018.”

Disclosure

Dominion holds Take-Two Interactive in its Global Trends Luxury Fund.


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