A video game company sitting on the most anticipated release in years would seem to deserve a premium price tag. Yet Take-Two Interactive Software (NASDAQ:TTWO) trades at a lower multiple than it has averaged over the past five years, with Grand Theft Auto VI only weeks away.
Take-Two owns Rockstar Games, the studio behind Grand Theft Auto and Red Dead Redemption, along with 2K’s NBA 2K series and Zynga’s mobile titles like Toon Blast and Words With Friends. It earns money when people buy its games, and even more from what they keep spending afterward on virtual currency, add-ons, and in-game items. Even with that lucrative pipeline, the video game publisher doesn’t secure a spot among the 10 Best Undervalued Stocks to Buy in October. That leaves investors with a puzzle. Is the market underrating the biggest launch in the company’s history, or quietly pricing in softness elsewhere in the portfolio? The answer depends on what happens after the launch-day buzz fades.
Players Who Never Leave
Take-Two’s real edge isn’t one game. It’s a catalog players keep returning to. In the fiscal first quarter of 2027, which ended in June, recurrent consumer spending made up 84% of net bookings (sales measured before accounting deferrals). That’s money from people who already own the games and keep paying to play them.
The company’s list of top contributors reads like a roll call of long-running franchises: NBA 2K, Grand Theft Auto, Red Dead Redemption, and mobile staples such as Toon Blast, Match Factory!, and Empires & Puzzles. Many of these are years old and still among its biggest earners. Annual sports releases run on that same repeat-spending model, which a major rival sports-game publisher depends on as well.
A Quiet Quarter Before the Storm
The fiscal first quarter wasn’t a blowout. Net bookings slipped 3% to $1.39 billion, though that still landed slightly above management’s guidance range. GAAP net revenue edged up to $1.53 billion from $1.50 billion, while the company posted a GAAP net loss of $34.1 million, or $0.18 per share.
The outlook is where the story lives. Management reiterated its fiscal 2027 target of $8.0 billion to $8.2 billion in net bookings, with GTA VI scheduled to arrive in November on PS5 and Xbox Series X|S. CEO Strauss Zelnick said the company expects to sustain this new level of scale and generate strong cash flows. Even with that historic growth trajectory on the horizon, the video game publisher remains noticeably absent from the 10 Best Growth Stocks to Buy Now According to Billionaires. Put that full-year target next to a $1.39 billion quarter, and it’s obvious how much rides on the holiday months. CNBC reported that a recent preview of the game pointed to blockbuster demand.
What If Mobile Keeps Sliding?
The strongest objection sits in Take-Two’s largest platform. Mobile net bookings fell to $739.5 million from $792.8 million, still accounting for 53% of the total. Console net revenue moved the other way, climbing to $640.5 million from $550.6 million.
That split matters. GTA VI launches on consoles, so a shrinking mobile business would leave Take-Two leaning harder on a single franchise. It’s a pressure other mobile-heavy game makers have felt too. Recurrent spending dipped only 1%, so the engine underneath hasn’t stalled. But mobile is the piece to watch once the launch excitement settles.
The Discount Nobody Expected
At a forward P/E of 31.05, as of October 12, investors are paying about $31 for every $1 of expected earnings. That’s far below Take-Two’s 5-year average P/E of 51.25, even as the company heads into the biggest product cycle in its history. It still looks pricey next to the sector P/E of 12.29. But few companies in that group are staring at a growth spike like this one. Analysts expect EPS growth of 49.70% in 2028, a pace that makes a sector-average multiple a poor fit.
There’s an accounting wrinkle, too. GAAP guidance for fiscal 2027 calls for just $0.55 to $0.75 per share, so today’s valuation rests on the earnings investors expect after GTA VI ships, not on this year’s accounting profit. That’s a bet on execution, and a big one.
Here’s the tension, then. A stock that historically commanded more than 50 times earnings now sits near 31 right before its defining release. Either the market doubts the GTA VI surge will last, or it’s leaving room for upside if players keep spending long after launch. That valuation gap highlights how much the market demands proven, long-tail monetization, the kind seen when Tencent Music (TME) turns streaming into a sprawling entertainment machine, rather than relying entirely on a single console release window. Hedge fund interest has risen, with 84 funds holding the stock in the most recent quarter, up from 77 in the prior one. Short interest sits at 4.45% of float, suggesting relatively limited bearish positioning.
A Bet on the Long Tail
The evidence points to a stock priced for a big launch, but not necessarily a lasting one. At roughly 31 times expected earnings, well under its own five-year norm, Take-Two looks reasonably valued if GTA VI keeps players spending for years, the way its predecessor did.
The setup suits patient investors comfortable with a hit-driven business and willing to sit through launch-quarter volatility. Would the picture change? Another delay, or mobile declines deep enough to swallow the console gains, would make even this discounted multiple harder to defend
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