Take-Two Interactive Software Inc. (TTWO) - Get Report shares slumped lower in pre-market trading Wednesday after the Grand Theft Auto video game maker signaled a 'light" year for new title releases that offset stronger-than-expected fourth quarter earnings..
Take Two's plan to release 93 new video game titles over the next five years -- the "strongest pipeline in company history" -- followed last night's profit report that included a 49% rise in net bookings, to $729 million, and Street-beating earnings of $1.07 per share as gamers stayed at home, and increased engagement, during the coronavirus pandemic.
Looking into the group's 2021 fiscal year, which is expected to be light on new releases but modestly heavier on research and development costs, Take-Two expects revenues in the region of $2.63 billion to $2.73 billion, just below analysts' forecasts.
"While fiscal 2021 will be a light year for new releases, we expect to deliver strong results due to the diversity and strength of our catalog and live service offerings" CEO Strauss Zelnick told investors on a conference call late Wednesday.
"The transition to a new console cycle is always a very exciting time for our industry, and our development teams are already taking their creative aspirations to a new level by finding ways to push the limits of this new technology," he added. "However, the speed of these transitions can be unpredictable, particularly in the year up ended by COVID-19. And our fiscal 2021 release slate reflects our strategy to bring our creative achievements to the largest possible audience."
Take-Two shares were marked 4.32% lower in pre-market trading Thursday to indicate an opening bell price of $140.50 each. a move that would trim the stock's year-to-date gain to around 14.8%.
Take-Two said Grand Theft Auto and NBA 2.K20 and Red Dead Redemption were the key drivers to the fourth quarter gain in net bookings, and will likely continue to boost engagement in the three months ending in July, when bookings are likely to be pegged between $800 million and $850 million.
"Similar to its peers, Take-Two’s digital revenue saw benefits from stay-at-home tailwinds in the form of increased engagement from new and existing players," said Credit Suisse analyst Stephen Ju. "And while the company has usually been silent in regard to its longer term game release intentions, management took the incremental step to offer a five-year outlook which includes ~93 titles to be published in that time frame."
"While our near-term EPS estimates decrease given higher R&D costs, our price target marches higher to $141 on a more robust slate medium-to-longer term," he added.