S-Curve Capital
Long/Short Portfolio Manager, TMT
Take-Two's next rerating depends on details of its platform monetization bull case, which the market has not yet seen. @Maksim_P_M argues demand for GTA VI is strong and the upside lies in turning it into a platform through GTA+ and microtransactions, but the market is signaling that this does not matter yet. CEO Strauss Zelnick's non-deal roadshow this month aims to support the stock, but it is unclear what flips bears without data he has no incentive to give. x.com
Take-Two looks like a cooked stock that could become a tax-loss selling candidate in the release year of the biggest title ever. It has barely outperformed into the release, even on the rumored date, and is increasingly an orphan for long/short funds as real peers dwindle, while sell-side analysts already talk about comping the release. Still, if units beat expectations and monetization keeps beating for years, revisions would cut the other way; the stock is not cheap, but it never is. x.com x.com x.com x.com
Take-Two's GTA 6 excitement is already priced in, and without a marketplace or online ecosystem at launch, its larger commerce-platform thesis will take much longer to develop. The weekly structure broke and the stock has fallen about 25%, with a volume gap between $200 and $160; it should continue lower toward the monthly institutional buy zone, where $160-$170 offers a much better entry. Risk/reward doesn't justify a short here. x.com
Take-Two is heading lower because it priced Grand Theft Auto VI too low and will launch it without GTA Online, leaving a revenue air pocket ahead. Preorders start June 25 at $79.99 standard and $99.99 ultimate, when $100 up front would have been the right call. @KakashiCapital_ argues the $80 price is bullish and add-ons will follow, but investors are not prepared for the online revenue gap. x.com x.com x.com
GTA VI has tons of optionality to build a real in-game economy, which should make it a monster cash printer for Take-Two. x.com x.com
Take-Two could dip below 200 one more time before the GTA 6 release. Stocks facing binary events like this launch tend to make everyone panic right up until the last moment. x.com
Take-Two's $44B valuation is hard to justify after it lost $10B over four years, leaving only $3.6B of shareholder equity, while diluting shareholders by 50%. Even if GTA 6 is a huge success, it may not make up for those losses. x.com
Take-Two looks too cheap with GTA 6 on the horizon. There seems to be massive pent-up demand not just for GTA but for any reasonably good AAA game, and little real competition is left in that segment. x.com
GTA VI demand appears strong enough for Sony's PS5 price increases driven by memory costs to stick. Bloomberg reports PS5 sales jumped 22% because of GTA VI, supporting the holiday demand-inelasticity thesis. Sony has yet to guide the game into sales and profits; November guidance is the next test. x.com
Netflix's problems are solvable while it prints money, making the stock a bargain at this price with a huge moat and great franchise. Its strategy should include more movies in theaters, sports only at a reasonable cost, a fixed ad business, and buying Take-Two to own a game studio and IP; GTA6 is a huge opportunity to connect with younger viewers and run ads in-game. x.com x.com
Take-Two is a coiled spring waiting for GTA VI to print billions, so this quarter barely matters. Revenue rose just 2% to $1.53B while development costs and royalties jumped from $30M to $135M, cutting gross profit 7% and turning a $22M operating profit into a $36M loss; EPS fell from −$0.07 to −$0.18. Patience is required until the game launches. x.com
Sony might be a big winner if rising memory costs and GTA 6 push gamers to buy a PlayStation 5 before further price increases. After Apple's price hikes, people know memory is driving electronics prices higher, and GTA 6 releases this year. In-game purchases and PS Plus subscriptions add to the case, while most investors see only Take-Two as the obvious play. @michaelsikand argues demand is inelastic enough that Sony will sell every PlayStation it can make this fiscal year. x.com
