Please ensure Javascript is enabled for purposes of website accessibility

Why Take-Two Interactive Stock Rose 18.2% in August

By Keith Noonan – Sep 11, 2018 at 12:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Strong quarterly results, great performance for a legacy game, and the promise of an upcoming release helped Take-Two stock post its best month in 2018.

What happened

Take-Two Interactive (TTWO 3.48%) stock climbed 18.2% in August, according to data provided by S&P Global Market Intelligence. The video game publisher's share price gained ground following the publication of second-quarter results, which once again saw the company beat sales and earnings estimates.

TTWO Chart

TTWO data by YCharts.

The stock also appears to have benefited from a preview of upcoming game Red Dead Redemption 2 (RDR 2) and strong post-earnings sales performance from the company's hugely successful Grand Theft Auto V (GTA V), which first released in 2013 but has shown unprecedented sales longevity in the subsequent years.  

Four characters riding horses in Take-Two's Red Dead Redemption 2.

Image source: Take-Two Interactive. 

So what

Take-Two published second-quarter earnings after market close on Aug. 2. Sales were down roughly 7% year over year to land at $388 million, but earnings for the period actually climbed roughly 11%  thanks to a more favorable, digital-heavy sales makeup. Continued outperformance from GTA V was once again the biggest story of the quarter.

The company then debuted a six-minute gameplay trailer for RDR 2 on Aug. 9, which was well received and supported the general consensus that the game will be a hit. The next major catalyst for Take-Two stock appears to have come from NPD Group's sales data for North American video game sales in July, which was published on Aug. 22. The report delivered another victory for Take-Two and GTA V, with the company's marquis title coming in as the second-best-selling game for the month.

Now what

RDR 2 is due for release on Oct. 26 and looks primed to be a huge sales hit. Investors should keep a close eye on the title's performance. While RDR 2 is widely expected to put up great numbers, it's also important to remember that success isn't a given, and the title could still underperform if its quality fails to meet players' high expectations. The game is Take-Two's most important new release since GTA V and an important step in the company's efforts to strengthen its franchise portfolio, and it can be expected to have a big impact on the stock's performance over the next couple of years. 

Keith Noonan owns shares of Take-Two Interactive. The Motley Fool owns shares of and recommends Take-Two Interactive. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Take-Two Interactive Software, Inc. Stock Quote
Take-Two Interactive Software, Inc.
$121.38 (3.48%) $4.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.