Take-Two Cuts Forecast Amid Lower Consumer Spending and Competition

Summary

The video game publisher, Take-Two (NASDAQ:), is struggling due to decreased consumer spending and strong competition from rivals such as Electronic Arts (NASDAQ:) and Activision Blizzard (NASDAQ:), a Microsoft-owned company. Take-Two has trimmed its full-year bookings forecast and its projection for Q4 falls short of analysts’ expectations. The delay of one of its popular games has contributed to this outcome, although this has minimal long-term effect on the firm, as per the Wedbush securities analyst, Michael Pachter. Nevertheless, Take-Two’s newest net bookings projection for fiscal year 2025 has left investors disappointed. Take-Two’s “Grand Theft Auto VI” game, which is set to launch in 2025, was anticipated to provide a boost. However, the reduced forecast implies a delay in the said game’s release.

Impact on Take-Two

The video game giant, Take-Two, is facing headwinds due to lower consumer spending coupled with fierce competition from companies such as Electronic Arts and Microsoft’s own, Activision Blizzard. These factors are being felt within the company’s financial performance.

Modest Bookings Expected

Disappointing as it may seem, Take-Two is predicting fourth-quarter bookings ranging from $1.27 billion to $1.32 billion, falling short of analysts’ prediction set at $1.51 billion as per LSEG data. Furthermore, the company has slashed its full-year bookings forecast to a range of $5.25 billion to $5.30 billion, down from its original prediction of $5.45 billion to $5.55 billion.

Impact of Game Delay

Wedbush securities analyst Michael Pachter weighs in, stating, “The forecast cut is almost entirely attributable to the shift of a game out of the fiscal year, so no real impact on the company’s long-term prospects.” This delay, however, feeds into the general air of disappointment surrounding the company’s present financial outlook.

Soured Investor Relations

Continuing a string of disappointments, the company’s latest projection of “a little above $7 billion for net bookings” for fiscal 2025, which is a downward revision from the previous less than $8 billion forecast, has left investors disheartened. They were banking on a surge from the release of Take-Two’s “Grand Theft Auto VI”, the latest in the franchise and a best-seller, slated for a 2025 release. Pachter adds, “The reduction in outlook tells you it’s (“Grand Theft Auto VI”) not coming next fiscal year.”

Third-Quarter Results

Take-Two’s third-quarter net bookings dipped by 3% to $1.34 billion, in line with analysts’ projections. The firm’s CEO, Strauss Zelnick, mentioned that the solid performance of games such as “GTA Online” and the “Red Dead Redemption” series somewhat leveled the softness in mobile advertising and sales of “NBA 2K”. The adjusted earnings per share stood at 71 cents, marginally less than the estimated 72 cents.

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