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A Buying Opportunity for My Favorite Video Game Developer?

February 8, 2018

In 2017, 2.2 billion video gamers were expected to generate a massive $108.9 billion in games revenue alone. Those massive numbers are only one reason I was following yesterday's earnings reports closely. One of my favorite video game developers released earnings yesterday, and it looks like they might have dropped us right into a great buying opportunity…

Based in New York City, Take-Two Interactive Software, Inc. (TTWO) is a leading developer of video games. The company develops and markets its products through Rockstar Games and 2K, its two wholly-owned labels. Take-Two Interactive Software's games can be used on personal computers, smartphones and tablets, as well as game consoles like PlayStation and Xbox.

Following the closing bell last night, Take-Two Interactive Software released earnings and sales results for its third quarter in fiscal year 2018. During the quarter, net bookings declined 12.2% year-over-year to $653.9 million, down from $744.82 million in the year ago period. Take-Two also reported that net income soared to $25.1 million, compared with a loss of $29.8 million in the same quarter a year ago. Adjusted earnings per share surged 27.3% year-over-year to $1.26, up from $0.99 per share in the same quarter a year ago. Analysts were expecting earnings of $0.98 per share on $663.83 in sales, so Take-Two posted a 28.6% earnings surprise and a 1.5% sales miss.

Looking forward to their fourth quarter in fiscal year 2018, Take-Two expects net bookings to range between $410 million and $460 million. That represents 0.70% to 13% annual sales growth, and is on the higher end of the current consensus estimate for $442.08 million in sales.

For the year, Take-Two is calling for earnings per share between $1.50 and $1.60, on net bookings between $1.99 billion and $2.04 billion. That is higher than their previous guidance for net bookings between $1.93 billion and $2.03 billion, and represents 4.7% to 7.4% annual sales growth for the full year.

Additionally, company management confirmed that the highly anticipated and twice delayed Red Dead Redemption 2 game will launch on October 26, 2018, as well as a new title from one of their largest franchises.

Given the sales miss and drop in annual sales growth, TTWO shares ticked lower after the announcement. But I fully expect the stock to bounce back as Wall Street digests the company's earnings growth and higher forward-looking guidance, which makes this moment an excellent buying opportunity.

However, to maximize your profits on TTWO today, you want to know its exclusive Buy Below price only available to my Blue Chip Growth members. With Blue Chip Growth, you'll beat the market nearly 3-to-1 with our simple, but effective strategy. You won't have to spend countless hours learning complex charts or technical jargon. And most importantly, you can try this strategy 100% risk-free right now. I urge you to join Blue Chip Growth today.

Until tomorrow,

Louis Navellier

Louis Navellier

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