Wall Street isn't playing around with Take-Two Interactive (TTWO 0.72%) stock these days. The video game developer has seen its shares soar by nearly 45% in 2023 even as peers like Electronic Arts underperform the S&P 500.

Investors are excited about Take-Two's expanding content portfolio, which now includes multiple hit franchises from its acquisition of Zynga. But the more exciting factor is the company's release pipeline.

Management says it is preparing several game-changing launches for fiscal 2025 that will lift the business to new profit and sales heights, with further gains likely in the years ahead. But the risk is that this push is at least a year away. In the meantime, shareholders will have to endure some lukewarm results. Let's take a closer look.

The latest trends

There's no denying that Take-Two is coming off a fantastic growth year. Sales in fiscal 2023 were up 53% as the company incorporated casual games from Zynga into its portfolio that already includes big hits like Grand Theft Auto V and Red Dead Redemption. Revenue in the most recent quarter beat management's targets despite weakening demand in some parts of the video game industry.

But the just-started fiscal 2024 won't be as exciting as last year. Executives are forecasting net bookings between $5.45 billion and $5.55 billion, equating to just modest growth compared to last year's $5.28 billion. This prediction reflects what management called a "challenging consumer backdrop," plus the delay of several high-profile titles into the next year. That's an industrywide issue with most Wall Street pros predicting just a 4% sales uptick for rival Electronic Arts (EA), too .

High expectations

Much of the stock's rally can be pinned on expectations around the next fiscal year, 2025. Management said in a conference call with investors that a flood of big releases in that period should lift net bookings to over $8 billion. Take-Two is also predicting non-GAAP operating cash flow of over $1 billion compared to just $56 million in fiscal 2023 and a $100 million outlook for the current year.

These are impressive numbers, but investors should be cautious about reading too much into them. A lot can happen in the intervening fiscal year, including a delay to the anticipated rebound in video game spending. One or more of Take-Two's big releases might have technical problems or fail to strike a chord with gamers. And there's no predicting the timing or severity of any potential recession.

Watch the stock

In the meantime, it is very likely that Take-Two will post only modest sales growth this year, along with another fiscal year of losses as it works to integrate the expensive Zynga acquisition fully into the business. Keep these factors in mind when considering buying this video game stock today. The good news is that although its valuation has expanded, it isn't very expensive.

You can own shares for around 4.5 times sales compared to EA's price-to-sales (P/S) ratio of 5.2. While EA is further along in its growth story and is sustainably profitable, Take-Two appears to be headed in that direction, potentially making it an excellent long-term holding for investors willing to take on some risk.