"GTA V" a Blowout Win for Take-Two -- but Wall Street Yawns

What if a public company managed to book the highest sales results ever for an entertainment property launch, and Wall Street just shrugged? That's about what happened last week when Take-Two Interactive (NASDAQ: TTWO  ) announced its third-quarter earnings results.

With sell-in of 29 million units in just six weeks, the Grand Theft Auto V title blew away even the most optimistic sales estimates. The game helped Take-Two increase its revenue fourfold, to more than $1.2 billion, while delivering a huge boost to quarterly profits. The company also hiked its earnings outlook for the full year, and yet the stock barely budged.

In the video below, Fool contributor Demitrios Kalogeropoulos argues that the reason boils down to consistency: Investors are penalizing Take-Two for its lack of predictable sales growth. While competitors like Electronic Arts (NASDAQ: EA  ) and Activision Blizzard (NASDAQ: ATVI  ) ring the register each year on their major franchises, Take-Two waited five years between chapters in its iconic GTA franchise. While that's great for building up anticipation for a title, it's terrible for delivering the steady sales and earnings growth that investors seek.

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  • Report this Comment On November 08, 2013, at 4:54 PM, DylanW1 wrote:

    Hey, what do you think about the disposition effect to explain the lack of increase for the stock?

    Of course the companies inconsistency and dependency on hit games make it a risky stock, but do you think the stock is undervalued for these reasons?

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