Take-Two Rises 16% YTD: Should You Buy, Sell or Hold the Stock?

Take-Two Interactive Software TTWO shares have gained 15.6% in the year-to-date (YTD) period, outperforming the Zacks Consumer Discretionary sector, the S&P 500 index and the Zacks Gaming industry’s decline of 10.2%, 10.6% and 11.5%, respectively.

TTWO shares have been riding on recent momentum driven by key developments, including a Butterfinger partnership for Borderlands 4 and the launch of WWE 2K25. These initiatives are expected to boost consumer engagement and revenues, complementing the highly anticipated release of Grand Theft Auto VI, which is projected to significantly drive net bookings in fiscal 2026.

Amid the significant developments and TTWO’s recent share price rise, investors may be wondering how to play the stock. Let’s take a closer look at some of the factors helping and hurting Take-Two to determine whether you should buy, sell or hold the stock.

Factors Benefiting TTWO Stock

Take-Two’s robust pipeline and strong performance from core franchises continue to drive investor optimism. In the third quarter of fiscal 2025, NBA 2K posted standout results, with more than seven million units sold and recurrent consumer spending up 30% year over year. Titles like Grand Theft Auto V and Red Dead Redemption 2 remain strong revenue generators, selling more than 210 million and 70 million units, respectively. 

Take-Two Interactive Software, Inc. Price and Consensus

Take-Two Interactive Software, Inc. price-consensus-chart | Take-Two Interactive Software, Inc. Quote

The upcoming releases of Grand Theft Auto VI, Borderlands 4, Civilization VII, and Mafia: The Old Country are expected to bolster net bookings and profitability through fiscal 2026 and 2027. Additionally, mobile hit Match Factory is tracking to become Zynga’s second-largest game by the year-end, contributing to a 6% year-over-year increase in mobile net bookings.

Factors Weighing on TTWO Stock

Despite a promising roadmap, Take-Two continues to face challenges, especially within its mobile segment. While some mobile titles grew, overall results missed internal targets due to underperformance in legacy games like Empires and Puzzles and the hyper-casual portfolio.  The company also reported rising operating expenses, up 10% year over year in the third quarter, driven by marketing and personnel costs, with a portion of those expenses shifting into the fourth quarter. 

Additionally, Take-Two faces significant competition in the gaming industry from the likes of Electronic Arts Inc. EA, Nintendo NTDOY and Roblox RBLX, among others. The pressure from competition could affect margins and lead to market share losses. Electronic Arts has new gaming releases planned, including EA Sports F1 25, Star Wars Zero Company and Plants Vs. Zombies 3. Nintendo remains a global leader in interactive entertainment while Roblox differentiates itself by providing a platform for users to create their own games. Shares of Electronic Arts have lost 0.4% in the YTD period, while Nintendo and Roblox have gained 23.4% and 3.2%, respectively.

TTWO’s Earnings Estimate Revisions Show Steady Trend

The Zacks Consensus Estimate for TTWO’s fiscal 2025 earnings is currently pegged at $2.52 per share, which has remained unchanged over the past 30 days. The estimate indicates year-over-year growth of 0.40%. 

The consensus mark for revenues is pegged at $5.61 billion, indicating a year-over-year increase of 5.27%.

TTWO beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with the average surprise being 206.58%.

See the Zacks Earnings Calendar to stay ahead of market-making news.

Here’s Why You Should Hold TTWO Stock for Now

Take-Two remains fundamentally strong with a robust pipeline and growing digital revenues, supported by successful franchises and the addition of Zynga’s mobile titles. However, the company operates in a highly cyclical and hit-driven industry, where there is no certainty that upcoming titles will perform as expected. Rising operating expenses, declining demand post-pandemic, and intense competition add further pressure. Additionally, slower-than-expected mobile recovery could pressure margins in the short term.

TTWO currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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