TTWO Stock: As CEO Sheds Shares, What’s Ahead for Take-Two's Share Price?

Grand Theft Auto-publisher Take-Two has trended in recent months in anticipation of the release of the next instalment of the franchise. However, a possible delay could have an impact on sales and lead to a negative reaction in the Take-Two share price.

General investor interest in Take-Two [TTWO] started to ramp up back in November after the game's publisher officially confirmed that the highly anticipated next instalment in the Grand Theft Auto (GTA) franchise, GTA VI, is in the works.

According to Stockcircle, three ‘super investors’ bought $369.6m worth of Take-Two shares in Q4 2023, while two sold a combined $129.3m.

Buyers included Andreas Halvorsen, Co-founder and CEO of Viking Global Investors, who started a new position in the stock, snapping up approximately 2.4 million shares between $133.04 and $163.89. He had previously exited the stock in Q4 2022.

Chase Coleman, Founder and Partner of Tiger Global, sold approximately 99,800 Take-Two shares in Q4, reducing his stake by 1.9%. The stock was the fourth-biggest holding in the firm’s $14.1bn portfolio as of 31 December, accounting for 5.9%.

Ken Griffin, Founder, CEO and Co-chief Investment Officer of Citadel, slashed his stake by 85.7%, offloading approximately 560,000 shares.

Meanwhile, Take-Two Interactive CEO Strauss Zelnick sold $13.5m of stock on 12 April.

According to an SEC filing, 35,401 shares were sold at an average price of $147.60, 25,809 at an average of $148.67, and 29,641 at an average of $149.54. The sales were apparently made to meet tax obligations related to the vesting of restricted units that had been granted to Zelnick through his company, ZelnickMedia.

Take-Two’s Cost-Cutting Plan

CEO Zelnick’s stock sale came just a few days before Take-Two announced plans to trim its global workforce by 5%. The company said on 16 April that it has agreed to a cost-saving plan to “identify efficiencies across its business and enhance [its] margin profile while still investing for growth”.

The costs incurred as a result of the plan are expected to be $120m—$140 m. This includes $120m—$140 m related to the cancellation of planned titles and $25m—$35 m in employee severance.

The move to cut its headcount will likely disappoint some investors, especially as Zelnick had told IGN in February that there were “no current plans” for layoffs. But the company’s $460m acquisition of Gearbox Software from struggling Swedish gaming giant Embracer [EMBRAC-B:ST], announced in March, could explain the need to save costs elsewhere.

GTA VI Could Lead to Sales Jump in 2025

Net bookings in Q3 2024 — the three months to the end of December — were $1.3bn, thanks to Grand Theft Auto V, Grand Theft Auto Online, Red Dead Redemption and in-app purchases made through Zynga. For the full fiscal year (FY) ended 31 March, net bookings are forecast to be “a little above $7bn”, revised down from its previous estimate of $8bn.

“Our pipeline is groundbreaking for next year and beyond, teams are making excellent progress on game development, and nothing material has changed with regard to the lifetime value of our portfolio,” Chief Financial Officer Lainie Goldstein said on the Q3 earnings call.

While not explicitly stated, it’s thought that sales of GTA VI will likely be a main catalyst for the sales jump in FY25 — this is assuming that the game gets released before the fiscal year ends on 31 March 2026.

If the game isn’t released in FY25, however, Wedbush analyst Nick McKay told Bloomberg that he expects the TTWO share price “to react negatively, as it will confirm a longer wait than investors had hoped for”.

Take-Two Share Price Tumbles

Indeed, the Take-Two share price tumbled on 25 March following a report by gaming site Kotaku that production of GTA VI is “falling behind” schedule and the game could miss its 2025 release window.

The stock is down 7.8% in the past month through 22 April and down 12.6% year-to-date. It’s down 1.1% in the past six months and has gained 10% in the past year.

Other than owning the stock directly, another way to gain exposure to Take-Two is through thematic ETFs.

The Roundhill Video Games ETF [NERD] has Take-Two as its third-biggest holding as of 21 April, with a weighting of 7%, behind Nintendo [7974:T] and Electronic Arts [EA]. The fund is down 5% in the past year but up 8.4% in the past six months.

The Global X Video Games & Esports ETF [HERO] has Take-Two as its eighth-biggest holding, with a weighting of 5.3% as of 19 April. The fund is down 4.9% in the past year but up 6.7% in the past six months.

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