Key Stats for TTWO Stock
- Past week’s performance: -5.54%
- 52-week range: $155 to $258
- Valuation model target price: $292
- Implied upside: 51% over 2.1 years
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What Happened?
Shares of Take-Two Interactive Software (TTWO) have pulled back in recent weeks, even as the company delivered another earnings beat and reiterated its long-term release pipeline.
The most recent pressure followed Take-Two’s fiscal Q3 earnings report, where revenue rose 28% year over year to $1.76 billion, beating analyst estimates by 11%. Adjusted EPS came in at $1.30, topping expectations by 56%.
Despite the strong results, the stock fell more than 5% following earnings because investors focused on near-term margin pressure and higher development spending. Operating income remained negative over the trailing twelve months, reflecting continued investment ahead of major releases.
Investor attention also remained centered on Grand Theft Auto VI, which Take-Two confirmed is scheduled for release in May 2026. While the confirmation removed uncertainty around timing, it also pushed the largest revenue catalyst further into the future, which weighed on near-term sentiment.
At the same time, analysts trimmed near-term EBITDA and EBIT estimates for early fiscal 2026, reflecting heavier marketing and development costs ahead of GTA VI. However, estimates show a sharp rebound later in 2026, with revenue expected to surge nearly 99% year over year in the December 2026 quarter.
Overall, recent stock movement reflects valuation sensitivity and timing concerns rather than any deterioration in demand or franchise strength.
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Is TTWO Stock Undervalued?
Under the valuation model assumptions realized through March 2028, the stock is modeled using:
- Revenue growth (CAGR): 18.8%
- Operating margins: 22.3%
- Exit P/E multiple: 31.1x
Based on these inputs, the model estimates a target price of $292, implying 51% total upside from the current share price and a 21.3% annualized return over the next 2.1 years.
Execution over the next year remains tied to release timing and cost discipline. As major titles approach launch, revenue growth accelerates, and higher sales volumes absorb fixed development costs, driving margin improvement.
Take-Two ended the quarter with $2.4 billion in cash and short-term investments and $2.5 billion in long-term debt, giving the company flexibility to fund development and marketing ahead of its largest releases.
Free cash flow turned positive over the trailing twelve months, driven by stronger operating cash flow and lower acquisition spending compared to prior years.
If the company keeps upcoming launches on schedule, earnings power inflects meaningfully in late fiscal 2026, which helps explain the stock’s volatility despite elevated long-term expectations.
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