In January 2022, Take-Two Interactive (NASDAQ: TTWO) announced one of the biggest game industry acquisitions ever with a $12+ billion purchase of mobile game provide Zynga. That news lasted for a week until it was overshadowed by Microsoft’s planned purchase of Activision Blizzard for $68 billion.
While the Microsoft/ATVI deal is struggling to get approval, the Take-Two/Zynga deal was easily completed in May. Now Take-Two is struggling with the difficult process of combining two very different entities.
The challenge with Take-Two is expanding beyond Grand Theft Auto. Investors are awaiting a new GTA. Any bad news between now and the launch of GTA 6 is likely to see Take-Two stock heavily punished.
Like many investors, DFC is skeptical of Take-Two’s entry into mobile games. It could prove a major distraction. Take-Two may be better off focusing on high-end live services through its sports games and core franchises. The Private Division indie label has also had some nice success with products like Kerbal Space Program. Kerbal Space Program 2 is scheduled for release next month and it will be an interesting test of Take-Two’s publishing prowess.
Overall analysts are cautiously optimistic about Take-Two Interactive, looking for a 28% stock increase to a price of about $132. That is still well below the 2022 high of $182. DFC Intelligence actually expects a rise of closer to 45% with a price of $150. However, it comes with a big warning. Take-Two stock price is highly likely to be punished by disappointing results. Currently, we are not putting Take-Two into the DFC Stock Portfolio.