Take-Two Interactive Software (NASDAQ:TTWO) is one of the leading interactive software game publishers around. While its two chief competitors are 3x or 4x times bigger (by market cap) that hasn’t stopped TTWO from becoming a household name.
Even non-gamers know about Grand Theft Auto, TTWO’s leading game. It’s now on GTA 5, which has sold over 90 million copies worldwide since its launch in 2013 and sold 15 million copies just last year. It has become the world’s most profitable entertainment product of all time. It’s 5 million copies away from breaking the 100 million mark.
That’s a pretty impressive product. But TTWO isn’t just a caretaker of GTA. It also has NBA 2k, a top sports game brand and its Western-themed series Red Dead, among others.
So, its stable of titles is very impressive given its size and the massive amount of competition in the industry.
But TTWO has a different take on its games than most of the industry. CEO Strauss Zelnick comes from a background in the entertainment industry. He’s not a gamer.
His goal is make sure the company is building games that good stories, believable characters and a high level of quality in the worlds it creates. And it seems this continues to pay off.
Zelnick believes that having games that endure is more important than just having quick hits. That you are building a relationship with the gamers and that they will return to classic games even if they jump around to the most recent fads.
That kind of belief is important when you’re looking to build out products into a franchise. Gamers will come back for each new generation of the game. Gamers also know quality and detail and appreciate it and Take Two tries to deliver for their customers. TTWO would rather delay a release of a game to make sure it’s up to its high quality standards than launch it and then update it or simply compromise quality.
Sometimes that gets the company in hot water with analysts, since they want the revenue on the books and not in the ether. A classic example is TTWO’s newest game, Red Dead Redemption 2.
Initially, the game was to come out around spring of this year. But TTWO pushed back its delivery until October. That meant all the calculations the analysts had made were no turned on their head and the revenue delay was met with concern on Wall Street.
The stock started dropping in February and didn’t stop sliding until May. But since then TTWO stock has rallied more than 25%, and it’s up over 60% in the past 12 months. And with the slate of other major series, such as Civilization and Bioshock, there’s the potential to keep the
The point is, TTWO may be a bit volatile but it is the best bargain in the sector and has huge potential upside.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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