'Grand Theft Auto' sales supercharge Take-Two
The latest version in the wildly popular franchise is fast outracing forecasts. The stock also looks set for a wild ride.
The company netted $800 million in first-day sales alone, which translates to some 13 million units. Hudson Square analyst Daniel Ernst told Reuters the last major "Grand Theft Auto title sold about that many units in a year. He noted that the new title's sales, at a retail price of $60, surpassed his expectations.
Sales have been buoyed by overwhelming positive reviews for the game, which fans call GTA. Entertainment Weekly, for one, gave it an "A" and said "it is a game you cannot stop playing, because it just keeps on getting bigger." The Guardian newspaper called it "ridiculous fun." And GameStop.com described it as "outrageous" and "exhilarating."
And the GTA fun has just begun.
Two new gaming consoles, the Microsoft (MSFT) Xbox One and Sony's (SNE) PlayStation 4, are due to be unveiled in November. Take-Two hasn't announced when it will offer versions of GTA for these the new systems, but trust us, they are coming -- and along with them the potential for more new sales. (Microsoft is the parent company of Killer Companies.)
Whether it's game on for Take-Two's shares is a tougher call. The stock has surged nearly 60% this year and trades at an eye-popping price-to-earnings multiple of near 1,300. Some analysts, though, think the shares are getting in gear. Bank of America (BAC) just raised its price target to $24, about 40% above where the stock currently trades. Analysts' average price target is a more modest $21.08.
Those with high tolerance for risk, though, should consider adding Take Two to their portfolios. The stock is a favorite of activist investor Carl Icahn, who's its largest shareholder.
But be forewarned: Much like its mayhem-filled game, these shares aren't for the faint of heart. Investors should be prepared for a wild ride.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr and at jonathanberr.com.
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