Video game publisher Take-Two Interactive Software (TTWO) late Monday missed Wall Street’s targets for its fiscal second quarter and lowered its outlook for the December quarter and full year. TTWO stock tumbled in extended trading.
The New York City-based company earned an adjusted $1.30 a share on net bookings of $1.5 billion in the quarter ended Sept. 30. Analysts polled by FactSet had expected earnings of $1.37 a share on sales of $1.55 billion. On a year-over-year basis, Take-Two earnings fell 20% while net bookings rose 53%.
For the current quarter, Take-Two predicted adjusted earnings of 84 cents a share on net bookings of $1.435 billion. That’s based on the midpoint of its guidance. Analysts had been looking for earnings of $1.42 a share on sales of $1.7 billion in its fiscal third quarter ending Dec. 31.
For the fiscal year ending March 31, Take-Two forecast net bookings of $5.4 billion to $5.5 billion. The midpoint of $5.45 billion is lower that Wall Street’s target of $5.9 billion. Three months ago, Take-Two predicted fiscal 2023 net bookings of $5.8 billion to $5.9 billion.
TTWO Stock Falls After Report
In after-hours trading on the stock market today, TTWO stock plunged 13.3% to 94.00. During the regular session Monday, TTWO stock dipped a fraction to close at 108.40.
Take-Two owns such game franchises as “Grand Theft Auto,” “Red Dead Redemption” and “NBA 2K.” With its recent acquisition of Zynga, Take-Two has added such mobile games as “Empires & Puzzles,” “Merge Dragons” and “Words with Friends.”
“As we got into the end of the second quarter, we began to have concerns about the full year,” Chief Executive Strauss Zelnick told Investor’s Business Daily. “While the quarter itself was solid, it was not at the top end of the range.”
He added, “We are seeing some moderating of in-game spending on the mobile side. I attribute that to macroeconomic factors.”
Zelnick said he feels good about the direction of the company despite the economic headwinds.
“All of our titles are working. We really remain a hit factory. And we see terrific engagement across the board,” he said.
Take-Two Has Poor Composite Rating
Elsewhere Monday, rival Activision Blizzard (ATVI) reported that its game “Call of Duty: Modern Warfare 2” crossed $1 billion in sales worldwide in its first 10 days of release. That surpassed the previous record for the franchise of 15 days set in 2012 by “Call of Duty: Black Ops 2.”
Last week, industry peer Electronic Arts (EA) missed adjusted sales targets for the September quarter and lowered its outlook for bookings in the December quarter. However, it noted strong sales of EA Sports titles “FIFA 23” and “Madden NFL 23.”
EA ranks first out of 21 stocks in IBD’s Computer Software-Gaming industry group, according to IBD Stock Checkup. Activision is in third place, but its shares have been buoyed by Microsoft‘s (MSFT) pending acquisition of the company. Regulatory scrutiny has delayed the closing of that deal.
TTWO stock ranks ninth in the group with a poor IBD Composite Rating of 37 out of 99.
IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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