TTWO Take-Two Interactive
GTA VI is the harvest; the price already assumes a blockbuster, leaving little margin for error.
The story
Take-Two owns some of gaming's most durable IP (GTA, Red Dead, NBA 2K) plus Zynga's mobile portfolio. Reported losses come mostly from Zynga goodwill impairments and acquisition amortization, not weak economics. GTA VI is set to launch in November 2026, inside FY27, which should produce a step-change in revenue and a long tail of GTA Online monetization. The business is a mature franchise holder with a hit-driven cycle, and it is entering its peak harvest window.
Y1 growth reflects GTA VI landing in FY27 on top of a roughly $6.7B base. Margins normalize to about 27%, in line with top-tier publishers like EA, once impairments and Zynga amortization roll off. A 10-year horizon fits a franchise moat with recurring live-service revenue, and the low sales-to-capital reflects the large goodwill base plus heavy development spend.
Value drivers
| Revenue growth (Y1) | 35.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 10y |
| Target operating margin | 27.0% |
| Years to target margin | 3 |
| Sales-to-capital | 1.30 |
| Beta | 1.10 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 10.0% |
| Terminal WACC | 9.5% |
Valuation bridge
| PV of explicit FCFF | 11.80B |
| PV of terminal value | 32.72B |
| Equity value | 42.67B |
| ÷ shares → per share | $228.20 |
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 9.03B | 35.0% | 8.2% | 587.06M | 1.80B | -1.21B | -1.10B |
| 2 | 11.87B | 31.4% | 17.6% | 1.65B | 2.18B | -532.15M | -440.13M |
| 3 | 15.17B | 27.9% | 27.0% | 3.24B | 2.55B | 691.23M | 519.93M |
| 4 | 18.87B | 24.3% | 27.0% | 4.02B | 2.84B | 1.18B | 809.89M |
| 5 | 22.79B | 20.8% | 27.0% | 4.86B | 3.02B | 1.84B | 1.15B |
| 6 | 26.71B | 17.2% | 27.0% | 5.70B | 3.02B | 2.68B | 1.52B |
| 7 | 30.36B | 13.7% | 27.0% | 6.48B | 2.81B | 3.67B | 1.89B |
| 8 | 33.43B | 10.1% | 27.0% | 7.13B | 2.36B | 4.77B | 2.23B |
| 9 | 35.62B | 6.6% | 27.0% | 7.60B | 1.69B | 5.91B | 2.52B |
| 10 | 36.69B | 3.0% | 27.0% | 7.83B | 822.07M | 7.00B | 2.71B |
Key risks
- GTA VI slips again or underdelivers versus sky-high expectations
- Mobile (Zynga) continues to erode and triggers further impairments
- Post-GTA revenue cliff if the pipeline (Borderlands, BioShock, 2K sports) fails to fill the gap
Catalysts
- GTA VI launch in November 2026 and first-quarter sell-through data
- GTA Online 2.0 monetization and FY28 guidance showing recurring revenue durability