Can Take-Two Stock Manage the Enormous Expectations for GTA VI?

It’s been ten years since GTA V was released when Rockstar Games and parent company Take-Two Interactive (TTWO) immediately realized they had a runaway hit. The game broke through the $1-billion sales mark in under three days. Half a month later, the planned online component, GTA Online, was released—perhaps a little too quickly, as some reviewers noted. Technical issues like long wait times and frequent disconnections plagued the game, softening some of the enthusiasm from GTA V’s wildly successful release. 

Still, the game series became TTWO’s most profitable IP, earning nearly $8 billion in the past decade and fueling the company’s growth. When GTA V was released, the stock was trading at $18. Now, in 2023, TTWO is at $150. 

Rising Anticipation

Of course, this type of success breeds expectations. Fans and investors alike had eagerly awaited news of GTA VI for years. Speculation and release date predictions were thrown around almost every other month, but the most definitive news came from Rockstar Games President Sam Houser. 

On November 8, 2023, he announced via X (formerly Twitter) that the first trailer for GTA VI would be available in early December. The announcement came with the company’s latest quarterly earnings release, which reported modest growth. Shares jumped by more than 9% in pre-hours trading and closed at $143.47. This uptrend led to the stock reaching a new 52-week high above $160.

As promised, the first trailer was released on December 5, 2023, and the YouTube video has racked up over 126 million views as of December 8. Take-Two had previously promised AI integration to improve non-playable character (NPC) interactions and host official roleplaying servers. The announcement received an overwhelmingly positive reception among fans. Early indications also point to the game adopting a live-service model from the get-go, potentially increasing its profitability.

What Hype And Disappointment Can Do To A Game Release

This kind of hype surrounding upcoming games is not new in the industry. In 2012, CD Projekt Red (CDPR), the renowned developer of The Witcher series, announced that it was working on a new game called Cyberpunk 2077. Back then, CDPR had the reputation as one of the world's best and most trusted video game developers and one of Europe's most valuable gaming companies. It truly seemed like they could do no wrong. 

The announcement was warmly received by fans and investors alike, and the company’s stock grew massively in the run-up to the game’s release. Anticipation reached a fever pitch in 2019 when Keanu Reeves announced his involvement, and the game was set to be the biggest launch of the decade. 

Unfortunately, Cyberpunk 2077 would be released in December 2020 following several delays. Worse yet, some console versions had glaring performance and technical issues that sparked backlash across the industry. In response, Sony had to pull the game from its online store, and CDPR was forced to issue public apologies and facilitate refunds. 

Will GTA VI Be The Next Cyberpunk?

The thing is, Cyberpunk 2077 itself was a decent game. Reviews were largely positive, and had it been any other game from any other publisher, its merits would have been enough to rank it as a successful release. 

However, the hype before release, combined with the game’s failure to meet unreasonably high expectations, negated any goodwill it deserved. As a result, CDPR’s stock plummeted 29% after the release and is currently a quarter of what it was worth in 2020. 

There are parallels between CDPR’s Cyberpunk 2077 and Take-Two’s current position. Like Cyberpunk, GTA VI is a long-awaited game that started development as early as 2014, and expectations are already sky-high. Failure to meet promises can cause backlash among the gaming community, and any issues with the release may scare away investors. 

Expected Delays

Bank of America has already downgraded Take-Two from a Buy to a Hold due to concerns about the game’s release timing. Analysts fear that GTA VI will launch in August 2025 or later instead of the expected March 2025 release. There’s also no mention of a PC release date as of yet. TTWO’s stock is already feeling the effects of the downgrade, dropping nearly 2% in after-trading following the announcement. 

This fear is not unfounded, as Red Dead Redemption 2, Take-Two’s most recent major release, was delayed for over a year. To be fair, the game has sold more than 57 million copies and is consistently ranked as one of the best video games of all time. 

A History Of Quality

This commitment to quality, in my opinion, is Take-Two's strongest selling point. Rushed releases and early-access models are becoming the norm in the video game industry, but Rockstar and Take-Two are willing to spend more time polishing their offerings so they come out in the best possible state. GTA Online may have had issues when it first came out, but the company was willing to work on them to ensure longevity. 

Furthermore, an overwhelming majority of analysts still have high hopes for Take-Two Interactive. 

Take-Two last closing price was $155.32 - perhaps an attractive entry point for investors who are optimistic about their prospects.

 

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On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.