take-two interactive (NASDAQ: TTWO) There are some big questions that investors need to answer in the coming weeks. Shares of video game developers soared toward the end of 2023, but have recently lagged behind the market due to concerns about slowing growth. The stock price has fallen after management released an earnings report in early February that showed weak demand for the following major titles: NBA 2K24.
But there's another big update on the way that could change that narrative.
On May 16, Take-Two is scheduled to announce its fourth quarter fiscal 2024 financial results, along with detailed guidance for fiscal 2025. Financial year 2025 is expected to be a monumental year for the business with several innovative releases.highly anticipated grand theft auto That list also includes a launch, but a delay could threaten management's growth plans, so investors may want to wait for more information before buying this gaming stock.
Switch to defense
Take-Two didn't have much to celebrate for shareholders in its third quarter report (quarter ended December 31, 2023). While sales were certainly within management's expectations, sales were down 3% year over year, compared to a 2% increase for competitors. electronic arts. During the period, Take-Two's content portfolio failed to attract a large audience, with gamers avoiding some big titles.Latest NBA 2K Management said the casual games division was weighed down by stumbling releases and weak digital ad spending.
The situation has caused Take-Two to take a more defensive stance ahead of aggressive content launch plans this year. As a result, investors should look for improvements in metrics such as cash flow and operating margins over the next few quarters. “We aim to achieve greater operating leverage as we develop an outstanding release schedule,” CEO Strauss Zelnick said in a February press release.
growth prospects
The bigger question is whether management will satisfy investors with its near-term growth outlook in May. In February, management lowered its fiscal 2024 revenue outlook from $5.42 billion to $5.3 billion (both numbers are at the midpoint of their respective ranges).
This change had nothing to do with Take-Two's content release plans. Still, it was disappointing that management was forced to withdraw its short-term outlook. After all, most of the stock's rise over the past year can be attributed to Take-Two's 2025 outlook, so investors are nervous about May 16's lackluster outlook.
Ahead of the report, Wall Street analysts expected fiscal 2025 sales to jump more than 30% to $7 billion. The timing of some big releases could make a big difference here. grand theft auto 6This is the first new work in the blockbuster series in over 10 years, but no official release date has been decided yet. Management ideally invests with a better idea of whether that title will still play a significant role in fiscal year 2025 results, or whether delays in that or other games will instead drive growth into the future. I would like to offer it to my home.
Given Take-Two's declining sales and consecutive losses heading into fiscal 2025, investors may prefer to keep this stock on the sidelines for now.
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Demitri Kalogeropoulos has no position in any stocks mentioned. The Motley Fool is affiliated with and recommends Take-Two Interactive Software. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.
Should you buy this popular video game stock before May 16th? Originally published by The Motley Fool
