Credit: Shutterstock photoSomewhere out there, there may be a rock big enough to live under where you wouldn't have heard of the video game franchise Grand Theft Auto . It's the perfect scapegoat for everything that's wrong with America today. The game itself is rated Mature for good reason, it's crude, obnoxious, violent, obscene, and all those other pejorative verbs mothers across the US can name. But for the testosterone-infused, short attention span fan base, it's another word; Awesome.
You get to drive exotic cars, live in fancy houses, buy expensive goods and all that fun stuff. Of course then there's the blowing stuff up, going on murderous rampages and car-jacking. Say what you want to say about the games content, there's one thing that's tough to argue with and that's the money the franchise makes. You're talking over $1 billion for the latest installment's Xbox and PS3 release. That's over 185 million units sold over the franchise's history.
Who's cashing in on all this madness? Take Two Interactive ( TTWO ) is the company behind Rockstar and 2K Games, the makers of the franchise. The video game maker owns some of the most popular gaming franchises including BioShock, Borderlands, Grand Theft Auto, NBA 2K, Midnight Club, and Sid Meier's Civilization. In all, Take Two has 10 franchises that have sold over 5 million units a piece.
One area that Take Two is capitalizing in is digitally-delivered content. Before, games had to be printed on CD or DVD, covers made, manuals, then packaged up, delivered to stores and then into the hands of buyers. All this added cost was lost revenue for the game developers. They had to cut the middle man in on this process. Well now with the availability of high-speed internet this is starting to become a thing of the past. Users now can download their favorite games directly from the company's website or vendors like the XBOX Life Marketplace or Playstation's Now Network. This means more revenue for the developer. In fact, digitally-delivered revenue accounted for 18% of total revenue for TTWO in FY2014, up from only 8% in FY2010. -
Take Two is a top stock in a top industry. The industry ranks in the Top 3% of the 265 industries we follow with our Zacks Industry Rank. Not only is it a Zacks Rank #1 (Strong Buy), but it also has Growth and Value Style Scores of "A." Over the last 30 days analysts have increased their earnings estimate for the current quarter and for next year. The result has pushed up consensus for the current quarter from 25 cents to 27 cents and up from 68 cents to $1.25 for the next year.
Shares struggled early on in 2015, meeting heavy resistance just below $31 in late January. From there a dip below the 21-day moving average and a commodity channel index sell signal pushed shares all the way to lows near $23 in late April. The May earnings report provided some needed support and shares gapped to nearly $27 at the open of trading following the report, eventually closing above $28.50 that day. Anticipation heading into August's earnings report has the stock running again. Shares have broken out from the January high and are making fresh 52-week highs almost every day. Volume has increased as well during the breakout, confirming the bullish behavior.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
