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Take-Two Interactive: A Hidden Gem Ahead of GTA VI’s 2027 Surge

Julian CruzSaturday, May 17, 2025 2:39 pm ET

2min read

Investors seeking a high-potential, catalyst-driven opportunity should look no further than Take-Two Interactive (TTWO). Despite near-term headwinds from goodwill impairments and delayed earnings growth, the stock’s current valuation offers a compelling entry point ahead of Grand Theft Auto VI’s (GTA VI) anticipated 2027 revenue surge. With a robust pipeline, stable recurring revenue streams, and analyst optimism, Take-Two is primed for a multi-year growth cycle—making now an ideal time to buy.

Near-Term Challenges: A Buying Opportunity in Disguise

Take-Two’s recent struggles—$4.48 billion GAAP net loss in fiscal 2025 and $365.5 million Q2 net loss—have weighed on its stock price. However, these figures are skewed by one-time goodwill impairments and high upfront investments in game development, not core business weakness. Analysts emphasize that the $226.74 share price fails to reflect the company’s long-term potential.

Key near-term concerns include:
- Fiscal 2026 guidance cuts: Reduced EPS estimates (-$2.41 in 2026 vs. -$25.58 in 2025) due to ongoing operational investments.
- Currency headwinds: Exposure to the Turkish Lira has impacted margins, though this is a temporary drag.

Yet these challenges are transient, as recurring revenue streams and pipeline execution will drive a turnaround.

The Recurring Revenue Engine: Stability Amid Volatility

Take-Two’s live-service model ensures consistent cash flow, with 79–81% of revenue coming from NBA 2K, GTA Online, and mobile titles like Toon Blast. This recurring revenue base has grown 6% year-over-year, providing a solid foundation even during periods of upfront losses.

The $8.9 billion revenue target for fiscal 2027 (a 48% jump from 2026) underscores the company’s ability to scale. With GTA Online and Red Dead Online maintaining strong engagement, and mobile games contributing $1.47 billion in 2025, the business is far more resilient than its current valuation implies.

GTA VI: The Catalyst for 2027’s Growth Surge

While GTA VI’s May 2026 launch will drive fiscal 2026 results, its full revenue impact will crystallize in 2027. The game’s $1 billion development budget and industry-leading IP position it to deliver $1–1.5 billion in net bookings in its first year—a critical driver of the $8.9 billion fiscal 2027 revenue target.

Moreover, GTA VI’s live-service potential (similar to GTA V’s $15 billion lifetime earnings) creates a multi-year revenue tailwind. Analysts at Wedbush recently raised their price target to $275, citing “the highest upside in the sector” due to GTA VI’s transformative impact.

Valuation: A Discounted Entry Point

Take-Two’s $226.74 share price trades at a 1.67x forward P/S ratio based on fiscal 2027’s $8.9 billion revenue, far below the $234 average analyst target and well below Wedbush’s $275 high target. Even under conservative assumptions:
- EV/EBITDA in 2027: Using $562 million EBITDA guidance for fiscal 2026, the EV/EBITDA multiple drops to ~26x, which is reasonable given the growth profile.
- Risk/Reward: The stock’s -2.4% year-to-date performance has created a rare mispricing opportunity.

Analysts Agree: Buy Now for Long-Term Gains

Wedbush’s “Outperform” rating and $275 price target highlight confidence in GTA VI’s potential.
Benchmark and UBS maintain “Buy” ratings, citing strong IP diversity (e.g., Borderlands 4, Mafia: The Old Country) and mobile growth.

The consensus is clear: short-term volatility is masking a multi-year growth story.

Conclusion: Act Now Before the Surge

Take-Two’s stock is a textbook “value trap” turned opportunity: near-term losses and guidance cuts have obscured its $8.9 billion 2027 revenue vision and $275 analyst upside. With GTA VI’s 2026 launch and 2027’s full impact, now is the time to buy this undervalued gaming powerhouse.

Investment Action:
- Target: $275 (Wedbush’s high target).
- Catalysts: GTA VI’s performance, Q3 2026 earnings, and 2027 revenue acceleration.

The path to outperformance is clear—act now before the market catches up.

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