Is Take-Two Stock Worth Buying at $235?

Rising Expectations for Take-Two Interactive Software

Take-Two Interactive Software (NASDAQ: TTWO) is experiencing a surge in stock value, driven by high expectations for the upcoming release of "Grand Theft Auto VI." Analysts predict that this highly anticipated title will significantly boost Take-Two's revenue, with projections indicating a 52% increase in fiscal 2027. The success of the Grand Theft Auto franchise has long been a cornerstone of pop culture and one of the best-selling video game series of all time.

Scheduled for a May 26, 2026, release, "Grand Theft Auto VI" is expected to tap into a massive fanbase eager for a new adventure. It has been over a decade since the last major release, "Grand Theft Auto V," which has maintained a strong presence in the gaming world. The featured song in the release trailer for the new title saw an impressive 182,000% increase in Spotify streams, while the trailer itself was viewed over 475 million times in just the first 24 hours.

Investors are showing keen interest in Take-Two's prospects, especially with the blockbuster release of "Grand Theft Auto VI" less than a year away. The anticipation for the game is evident, as Take-Two stock has risen 27% year to date. Although the new release is still a year away, the potential windfall it can offer to Take-Two's business justifies buying the stock now, and growth estimates from Wall Street analysts seem to support this sentiment.

Strong Financial Outlook

From a valuation perspective, Take-Two stock is clearly priced for growth. It currently trades at a forward price-to-earnings (P/E) ratio of 87 based on earnings estimates for the current fiscal year (ending March 31, 2026). This multiple drops to 25 for fiscal 2027, based not just on expectations for "Grand Theft Auto" but also on strong sales across Take-Two's large catalogue of titles.

Take-Two has two upcoming releases this year that should deliver strong sales: "Borderlands 4" and "Mafia: The Old Country." "Borderlands" is the bigger franchise, with the previous installment selling 22 million units. Management's fiscal 2026 outlook calls for net bookings to grow roughly 5% over fiscal 2025, to a range of $5.9 billion to $6.0 billion. Nearly half of these bookings are expected to come from Zynga's mobile titles, with another 39% coming from the 2K label and 16% from Rockstar Games, which includes sales of the current "GTA" title.

Fiscal 2027 will be the first year to include sales of "GTA VI." While management does not offer specific revenue guidance this far out, Wall Street analysts currently expect revenue to grow 52% over fiscal 2026 to reach a record $9.1 billion. For context, the previous release grew revenue 98% in Take-Two's fiscal 2014, and it supported a decade of growth for the business.

Future Growth Potential

Take-Two could be looking at a strong five-year stretch of growth, at a minimum. Wall Street analysts currently project revenue will reach $10.9 billion by fiscal 2030, implying a five-year compound annual growth rate of 14%. The company is executing a long-term growth strategy that extends beyond "GTA VI" as well. It has 25 titles planned for release through fiscal 2028, including releases for existing franchises, five sports simulation games, and four mobile titles. This should further pad its top-line momentum.

What's really going to move the stock is earnings. Three quarters of Take-Two's bookings come from recurrent consumer spending, including virtual currency, add-on content updates to existing games, and in-game advertising. This revenue is very accretive to margins and earnings, and Take-Two has mastered the art of keeping players spending time with "GTA V" for the last decade through "Grand Theft Auto Online."

"GTA VI" should be able to drive similar growth in recurrent consumer spending. Analysts expect Take-Two's adjusted earnings to grow at an annualized rate of 39% over the next five years, reaching $16.03 per share. If the stock is still trading at 25 times earnings, that would put the share price at $400. Even allowing for some margin of error in analysts' estimates, this top video game stock still offers upside from the current $234 share price.

However, investors need to keep in mind that release dates for games are not set in stone. "GTA VI" was originally scheduled to release this year, but it was pushed back to give the developers more time to polish the game. Given this uncertainty, which tends to result in greater volatility for the stock, I would keep any position in Take-Two small and then buy more shares on any dips.