Take-Two Interactive’s share price surges thanks to Red Dead 2
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Take-Two Interactive’s share price surges thanks to Red Dead 2

Market-leading game developer and publisher Take-Two Interactive saw its share price surge after releasing the long-awaited sequel to its stand-out hit Red Dead Redemption. We covered the launch (and reception) of Red Dead Redemption 2 when it came out earlier this month, but now the company has revealed just how well the game is doing… and investors have responded by sending the share price up. In doing so, they join the multitude of critics, gamers, and analysts who have had nothing but praise for the title thus far.

Take-Two Interactive’s share price soared by 10% after Read Dead Redemption 2’s release

graph 0111 taketwo

Source: Yahoo Finance

Analysts at Piper Jaffray, who were bullish over Read Dead Redemption 2’s prospects from the get go, had predicted that the game would garner $400 to $500 million in sales over its first three days. But Take-Two has blown past that forecast with ease. The company reported on Tuesday that it had already taken more than $725 million in global retail sell-through for the game’s opening weekend, making it “the single-biggest opening weekend in the history of entertainment,” according to Take-Two’s press release. It’s also the second-highest grossing entertainment launch ever – surpassed only by another Take-Two title, Grand Theft Auto V.

Better than expected sales are a good thing in-and-of themselves – but there is another, more important, reason that analysts are so excited by Red Dead 2’s early success: sales over a launch period are strongly predictive of overall sales throughout a game’s lifecycle.

Jefferies analyst Timothy O’Shea explains why this is a good thing for Take-Two – and the video game industry overall: “The record-setting launch underscores how video games continue to steal market share away from other forms of media. The important part for investors is how this game now looks poised to generate high margin revenue for the next four or five years. … It reinforces our positive thesis that Take-Two will continue to transform into a more recurring, more predictable and more profitable model over time.”

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


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.