Take-Two Stock Before GTA 6: Buy Now or Wait?

Should you buy TTWO stock before GTA 6?

0:00 GTA 6 comes out in less than a month, and Take Two, the company that owns Rockstar, is sitting around $200 a share, about 25% below its high from July. So, should you buy the stock before the biggest game launch in years? Because the last two times Rockstar released a giant game, the stock was lower on launch day than it was a month before. [screaming] I'll show you what GTA 6 actually has to sell to make today's price look cheap, and what the stock did after both of those launches, because the ending wasn't the same.

0:32 And if you're planning to buy the game and the stock, this might save you from paying twice. Picture a guy named Tony, who owns the most famous burger joint in town.

Take-Two as a burger joint (the sequel burger)

0:40 For over a decade, one burger has paid his bills, and now the sequel burger finally drops in a few weeks. Everyone knows there will be a line around the block. The real question is, how many burgers Tony has to sell to be worth what people are paying for a slice of his restaurant today. That's basically Take-Two.

GTA 5's numbers and GTA 6 pre-orders

0:55 GTA 5 came out more than 12 years ago and has sold well over 200 million copies, and it brought in 800 million retail sales on its very first day. GTA 6 lands on PlayStation 5 and Xbox Series X and S, with a standard edition at $80 and an ultimate edition at $100. [screaming] And the early numbers look strong. Sensor Tower estimates over 6 million digital pre-orders as of mid-October, worth about 594 million, and that's before a single disc is sold.

1:26 Take-Two CEO Strauss Zelnick told CNBC that pre-orders went better than expected, but he was careful not to celebrate early.

What Take-Two's CEO told CNBC

1:35 You know, we never claim victory before it occurs. I know that our Rockstar Games division has tried to innovate and um understands that as great as the anticipation is, we need to exceed expectations. Um I believe that we will. Which is fair. Tony's line is long, but no one has tasted the burger quite yet.

What's already baked into TTWO stock

1:55 So, here's what's already baked into the price. Take-Two expects 8 billion to 8.2 billion in net bookings this fiscal year with GTA 6 as the main reason. Net bookings basically just means the money customers spend in the period whether the company counts it as revenue yet or not. In that today's price the stock trades at about 24 times what analysts expect it to earn going forward. Now for that to look cheap GTA 6 has to do more than sell.

How many copies GTA 6 has to sell

2:17 It has to keep selling for years the way GTA 5 did with its online mode. Piper Sandler expects tens of millions of copies sold by the end of April and DFC Intelligence expects 40 million in the first year. At $80 a copy Piper's number alone is about 2.8 billion at the register and that's before Sony and Microsoft take their cut. So it's not enough for Tony's burger to be good. It has to be the burger that people come back for every week. Now let's look at what happened in the last two times because this my friends is where it gets interesting.

What TTWO stock did after GTA 5 and Red Dead 2

2:53 A month before GTA 5 came out the stock was about $18.50. On launch day it closed at $17. In 2018 a month before Red Dead Redemption 2 the stock was roughly $140. On launch day it closed around $120. So both times buying a month early meant you were down on launch day. That's the classic buy the rumor sell the news. But here's the part people skip. A year after GTA 5 came out the stock had gone from 17 to over 22. A year after Red Dead 2 it was only back to about $125 and in between it dropped all the way to about 85.

3:32 Same company same kind of blockbuster completely different year after. And that's just with two examples. So no one should treat this like a law of physics. There are also real risks this time.

The risks: delays, leaks and AI

3:42 The game has already been delayed twice and the second delay knocked the stock down almost 9% in a day. This month a report that the PC version won't come out until early 2027 sent the stock down over 5% and a group threatening to leak more of the game didn't help. And back in January Google showed off an AI tool that builds playable worlds from a text prompt and Take-Two dropped about 10% in a single day. Just another example of AI disruption. The doomer has been waiting for this game for over a decade, and he still thinks it gets delayed again.

4:10 One more thing worth noting, in early June, Zelnick and Take Two's president sold over 100 million of stock between them, around the time big stock awards vested.

Insider selling before the launch

4:20 Now, that's common when awards vest, and it doesn't mean they expect a flop, but it's worth knowing who's selling ahead of the launch. On the other side, 29 analysts cover the stock, almost all of them rated a buy, and their average target is still around $285, more than 40% above today's price, even after Bank of America trimmed its target this week.

Analyst price targets ($285 average)

4:37 Zoomer already pre-ordered two copies and bought the stock, and he's calling it a hedge. So, here's how I think about it.

How I'd think about buying before launch

4:43 Take Two reports earnings about 10 days before the launch, and that's your first clue on pre-orders and guidance. If you want the stock for the next 5 years, a month of timing probably won't matter much. If you're buying for launch day, history suggests that that is when the hype begins to cool down. Sell the news, anyone? Chad's buying the premium edition and calling it research, and the tradwife wants to know who's watching the kids while he does it.

5:04 As for Tony, the line is already around the block, and in a few weeks we find out if people come back for seconds. Are you buying the game, the stock, both, or neither? Let me know in the comments, I'm interested to hear. YouTube picked this next video for you, and unlike GTA 6, you don't have to wait for it.