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GTA Online 2.0 is Key to Take-Two's Bull Case, MoffettNathanson Says
Summary
Research firm MoffettNathanson identifies the upcoming multiplayer component of Grand Theft Auto VI as the most critical factor for investors evaluating Take-Two Interactive stock, citing its potential for long-term recurring revenue.
MoffettNathanson has identified the upcoming multiplayer component of Grand Theft Auto VI, dubbed "GTA Online 2.0," as the most significant element in the bull case for Take-Two Interactive Software (NASDAQ:TTWO). The firm's analysis underscores the long-term revenue potential of the online service, even with limited public information currently available.
The Core of the Bull Case
According to the research note, the performance of GTA Online 2.0 is the most important component for investors. The original GTA Online has a proven track record, generating substantial recurring revenue for more than 12 years and adding significantly to the company's profit margins.
MoffettNathanson acknowledges that the development costs for GTA Online's content are higher than for purely cosmetic-based models in other games. However, the firm notes that this monetization is built upon the foundational development of the single-player game, making it a powerful profit driver.
GTA VI Launch Expectations
The highly anticipated single-player game, Grand Theft Auto VI, serves as the foundation for this online strategy. MoffettNathanson outlined key expectations for its launch:
Ad- Release Date: Scheduled for November 19.
- Setting: A return to Vice City featuring two playable protagonists.
- Pricing: A manufacturer’s suggested retail price (MSRP) of $80 or higher.
The firm anticipates that initial sales of the full game will be heavily front-loaded, with the bulk of unit sales occurring within the first one to two years of its release.
Analyst's Framework
MoffettNathanson clarified that its research serves as a reference piece to evaluate the GTA Online 2.0 opportunity from a market and player perspective, rather than presenting a new financial model. The analysis is built on the assumption that players will need to purchase GTA VI to access the new online experience.
The firm also assumes the new version will likely operate alongside the existing GTA Online. The central question for investors, according to the note, is whether this new iteration can monetize more effectively than its highly successful predecessor.
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