TTWO Stock Risk & Deep Value Analysis
Take-Two Interactive Software Inc
DVR Score
out of 10
What You Need to Know About TTWO Stock
We analyzed Take-Two Interactive Software Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran TTWO through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate. Here's what we found.
TTWO Risk Analysis & Red Flags
What Could Go Wrong
The biggest risk is that Grand Theft Auto VI, despite its immense anticipation, fails to meet the extremely high market expectations in terms of initial sales or long-term engagement. Given the multi-billion dollar investment and its central role in fiscal 2027 guidance, underperformance could lead to missed revenue targets of potentially $1-2 billion in its first year, impacting profitability and investor sentiment significantly.
Risk Matrix
Overall
Moderate
Financial
Medium
Market
Medium
Competitive
Medium
Execution
Medium
Regulatory
Low
Red Flags
- ⚠
Insider selling of 64,724 shares worth $13.87 million in the last 90 days, potentially indicating a lack of strong conviction from management regarding near-term upside.
- ⚠
Despite dramatic improvement, the company reported a GAAP net loss of $298.2 million for FY2026, indicating ongoing unprofitability which must be resolved post-GTA VI launch.
Upcoming Risk Events
- 📅
Q1 FY2027 Earnings Miss (estimated August 6, 2026): A significant miss on revenue or a weaker-than-expected outlook for FY2027 could trigger a 10-15% stock decline.
- 📅
GTA VI Underperformance or Delay (Pre-Nov 2026): Any credible report of a delay or weaker-than-expected critical reception post-launch could lead to a substantial stock correction of 20%+ due to high market expectations.
When to Reconsider
- 🚪
Exit if quarterly net bookings guidance for Q1/Q2 FY2027 (excluding GTA VI launch period) shows a YoY decline exceeding 10% after adjusting for non-recurring items.
- 🚪
Sell if Grand Theft Auto VI receives a Metacritic score below 90% and fails to generate at least $2 billion in net bookings within its first two months of release (by January 2027).
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Investment Thesis
If Grand Theft Auto VI launches on November 19, 2026, achieving over $8 billion in net bookings in its first fiscal year (FY2027) and consistently driving strong recurring revenue through GTA Online, then Take-Two Interactive could return to substantial GAAP net profitability and generate significant free cash flow, leading to a re-rating of its valuation multiples and providing 2-3x capital appreciation over the next 3-5 years. This is bullish because the market is underestimating the long-tail revenue and margin expansion potential beyond initial launch, especially with the company's strong operational turnaround on profitability already underway.
Is TTWO Stock Undervalued?
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TTWO Price Targets & Strategy
12-Month Target
$287.93
Bull Case
$320.00
Bear Case
$170.00
Valuation Basis
Based on analyst median target of $287.93, reflecting a forward EV/Sales multiple of ~5.0x applied to projected FY227 net bookings of $8.5B (post-GTA VI launch).
Entry Strategy
Consider dollar-cost averaging in the $210-$220 range, leveraging any market weakness or dips towards the lower end of the current trading range (e.g., around $200-$210 support zone).
Exit Strategy
Take 30% profit at $280-$300 (near analyst consensus); consider stop-loss if price breaks below $190 on substantial volume, indicating a fundamental shift or significant delay in GTA VI.
Portfolio Allocation
3-5% for moderate risk tolerance
Price Targets & Strategy
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Is TTWO Financially Healthy?
Valuation
P/E Ratio
20.59
Forward P/E
17.59
EV/EBITDA
116.36
PEG Ratio
2.09
Price/Book
8.98
Price/Sales
4.40
Profitability
Gross Margin
57.22%
Operating Margin
-1.56%
Net Margin
-4.48%
Return on Equity
-8.57%
Revenue Growth
18.16%
EPS
$-1.61
Balance Sheet
Current Ratio
1.24
Quick Ratio
1.12
Debt/Equity
0.72
Total Debt
$2.39B
Cash & Equivalents
$2.75B
Cash Flow
Operating Cash Flow
$624.30M
Free Cash Flow
$461.50M
EBITDA
$94.30M
Other
Beta (Volatility)
0.99
Does TTWO Have a Competitive Moat?
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🏰 Wide
Moat Trend
Expanding
Moat Sources
3 Identified
Take-Two's moat is highly durable, primarily stemming from its iconic and irreplaceable IP like Grand Theft Auto and NBA 2K. These franchises command immense brand loyalty and have created vast ecosystems (e.g., GTA Online) with significant switching costs, ensuring recurring revenue and a resilient customer base for decades.
Moat Erosion Risks
- •Erosion of brand loyalty due to prolonged content droughts or missteps in new game releases (e.g., Cyberpunk 2077 initial reception).
- •Emergence of disruptive technologies or business models that fundamentally alter how interactive entertainment is consumed, requiring significant adaptation.
TTWO Competitive Moat Analysis
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TTWO Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Bullish, primarily driven by strong anticipation for Grand Theft Auto VI, often generating significant online discussion and engagement.
Institutional Sentiment
Positive, with a 'Moderate Buy' consensus from analysts; however, some downgrades like Zacks Research to Hold (Feb 12, 2026) and minor target cuts (Wells Fargo) indicate cautious optimism.
Insider Activity (Form 4)
Insiders sold 64,724 shares worth $13.87 million in the last ninety days. Specific details on individual Form 4 filings are not available in the provided research.
Options Flow
Normal options activity; no specific data provided for unusual put/call ratio shifts or large block trades.
Earnings Intelligence
Next Earnings
Estimated August 6, 2026
Surprise Probability
Medium
Historical Earnings Pattern
Take-Two's stock often exhibits volatility around major earnings reports and announcements related to its key franchises, particularly Grand Theft Auto. Positive news can lead to strong rallies, while any delays or underperformance typically result in sharp corrections.
Key Metrics to Watch
Competitive Position
Top Competitor
Electronic Arts (EA)
Market Share Trend
Stable, anchored by dominant franchises like GTA and NBA 2K; Zynga acquisition expanded mobile market share.
Valuation vs Peers
TTWO typically trades at a premium to some peers on an EV/Sales basis due to its valuable IP, but its recent unprofitability (FY2026 GAAP net loss) makes direct P/E comparisons challenging against profitable competitors like EA. Will likely see re-rating upon consistent profitability post-GTA VI.
Competitive Advantages
- •Unparalleled IP Portfolio (Grand Theft Auto, Red Dead Redemption, NBA 2K)
- •Strong global development and publishing capabilities
- •Diversified presence across console, PC, and mobile gaming platforms
Market Intelligence
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What Could Drive TTWO Stock Higher?
Near-Term (0-6 months)
- •Q1 FY2027 Earnings Report (estimated August 6, 2026): Commentary on GTA VI development and pre-order momentum could provide an early read on FY2027 guidance.
- •Grand Theft Auto VI Official Launch (November 19, 2026): Initial sales figures and player engagement data will directly impact revenue guidance for FY2027.
Medium-Term (6-18 months)
- •Post-Launch GTA VI Monetization & Live Services (Q1-Q2 FY2027): Sustained in-game purchases and recurring revenue from GTA Online within GTA VI could drive incremental revenue exceeding $1B annually.
- •Zynga Mobile Portfolio Expansion (FY2027-FY2028): Successful launch of new mobile titles and cross-platform synergies could add $500M-$800M in annual net bookings, diversifying revenue.
Long-Term (18+ months)
- •Expansion into AI-driven Content Creation and Advertising (FY2028-FY2029): If AI tools significantly reduce development costs or enable personalized in-game advertising, net margins could improve by 2-3 percentage points, driving higher FCF.
- •New Major IP Launches Post-GTA VI Cycle (FY2029-FY2030): Successful introduction of a new blockbuster franchise could diversify revenue streams beyond current core IPs and add $1B+ in annual net bookings, fueling sustained growth.
Catalysts & Growth Drivers
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What's the Bull Case for TTWO?
- ✓
Watch GTA VI first-week and first-month sales figures (post-Nov 2026) for confirmation of market dominance and initial revenue guidance.
- ✓
Monitor quarterly GAAP net income trend; positive net income for two consecutive quarters would confirm the profitability turnaround and significantly de-risk the investment.
Bull Case Analysis
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Competing with TTWO
See how Take-Two Interactive Software Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Take-Two Interactive Software Inc TTWO | $41.6B | 4.2 | 20.6 | $6.7B | -4.5% | 18.2% | |
Microsoft Corp MSFT | $3.2T | 0.5 | 25.6 | $281.7B | 39.3% | 17.9% | Compare → |
NVIDIA Corp NVDA | $5.3T | 6.2 | 33.1 | $130.5B | 63.0% | 70.7% | Compare → |
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How Take-Two Interactive Software Inc Makes Money
Take-Two Interactive develops, publishes, and markets interactive entertainment primarily through its Rockstar Games, 2K, Private Division, and Zynga labels. It generates revenue by selling full video game titles for consoles and PCs, often at a premium price, and through extensive post-launch monetization via in-game purchases, virtual currency, and live-service content. With the acquisition of Zynga, it also operates a substantial free-to-play mobile gaming business driven by in-app purchases and advertising. The company's business model thrives on the enduring popularity of its blockbuster franchises.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Take-Two Interactive Software Inc (TTWO)?
As of May 31, 2026, Take-Two Interactive Software Inc has a DVR Score of 4.2 out of 10, placing it in the "Proceed with Caution" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Take-Two Interactive Software Inc?
Take-Two Interactive Software Inc's market capitalization is approximately $41.6B..
What is the risk level for TTWO stock?
Our analysis rates Take-Two Interactive Software Inc's overall risk as Moderate. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of TTWO?
Take-Two Interactive Software Inc currently has a price-to-earnings (P/E) ratio of 20.6. This is in line with broader market averages.
Is Take-Two Interactive Software Inc's revenue growing?
Take-Two Interactive Software Inc has reported revenue growth of 18.2%. The company is showing strong top-line momentum.
Is TTWO stock profitable?
Take-Two Interactive Software Inc has a profit margin of -4.5%. The company is currently unprofitable.
How often is the TTWO DVR analysis updated?
Our AI-powered analysis of Take-Two Interactive Software Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on May 31, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for TTWO (Take-Two Interactive Software Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.