After falling more than 30% this year, the stock of Take-Two Interactive (TTWO 0.72%) has been trading roughly flat since May. It's possible the stock has bottomed and could rebound, especially with Take-Two expected to release new titles over the next few years from its previously announced deep pipeline. But there are also reasons the stock could still hit new lows in the near term.

The company will report financial results for the fiscal second quarter (ending in September) on Monday, Nov. 7, after the markets close. There are at least three things investors should be aware of heading into the report.

1. The market expects strong growth

Following the completed acquisition of leading mobile game producer Zynga, Take-Two is projecting bookings in the range of $1.5 billion to $1.55 billion for the fiscal second quarter, representing growth of at least 50% year over year.   

Take-Two doesn't provide specific earnings guidance, but Wall Street analysts expect adjusted earnings per share to come in at $1.37 compared with $1.63 last year. High-margin revenue from in-game spending is expected to be offset by higher operating expenses going toward new game development and marketing.

The key game to watch is NBA 2K23, which was released in September. The NBA 2K series generates a lot of in-game spending from players buying virtual currency while playing the game. Management is guiding for 85% growth in recurrent spending year over year, reaching approximately $1.25 billion, or 81% of total bookings at the midpoint of guidance. Upside to this number will be key if Take-Two is going to surprise the market with better-than-expected earnings.

2. Lack of near-term growth catalysts

NBA 2K23 was the only major release from Take-Two in the quarter, and therefore, is expected to be the star of the show. There is momentum with this series, with NBA 2K22 selling over 12 million units and beating the previous version's results last quarter. Wedbush Securities analyst Michael Pachter previously said NBA 2K23 could deliver record unit sales. 

One reason to watch for strong sales of NBA 2K23 is the game launched a deluxe Michael Jordan edition and a Championship edition that retails for $149.99 -- about twice the regular retail price of a new release. Better-than-expected sales of the deluxe edition would provide some upside to margins and earnings.

However, MKM Partners analyst Eric Handler expects Take-Two's quarter to be "uneventful," with modest upside to guidance from the NBA 2K franchise being offset by weakness elsewhere, such as Zynga's mobile business. 

3. Zynga will contribute nearly half of Take-Two's bookings

For fiscal 2023 ending in March, management expects sales from the 2K label to total 37% of bookings, with Rockstar (Grand Theft Auto) making up 17%. Zynga is expected to be the largest contributor to bookings at 45% of the business, and this could place a dark cloud over Take-Two's stock performance given the weakness in the mobile gaming market this year.

In the previous quarter, AppLovin, a leading mobile advertising platform used by Take-Two and Zynga, reported stable consumption of mobile gaming apps but noted that consumer spending in those apps was down compared with 2021. 

Raymond James analyst Andrew Marok recently cited third-party data showing Take-Two's core portfolio of games being "mostly stable" in September, while Zynga's double-digit declines year over year worsened across most of its major mobile titles. 

In the June-ending fiscal first quarter, Take-Two reported significant growth in advertising net bookings that was offset by pressure in in-app purchases due to the softening macroeconomic environment. This indicates the video game industry is not recession-proof.

Take-Two is a good long-term investment, with 87 new releases across all platforms expected within the next four years. But investors might want to wait until after the earnings report before pulling the trigger. Stocks have been quite volatile lately after earnings results, and there is the potential for a sharp sell-off if Zynga reports weakness in bookings that the market isn't expecting.