Take-Two Interactive Software Firing on All Cylinders
I have been bullish on mid-cap gaming developer Take-Two Interactive Software Inc (NASDAQ:TTWO) for years and the bull case has really paid off.
The chart of TTWO stock shows the impressive and steady upside trend established since breaking out at around $30.00 in October 2015. The stock has held on to a bullish golden cross since the breakout, with the 50-day moving average above the 200-day moving average. Take-Two Interactive Software just made a nice break above $50.00.
The upward trend in TTWO stock has been accompanied by rising relative strength and a bullish moving average convergence-divergence (MACD).
Take-Two Interactive Software stock has more than doubled since then and has easily outperformed the S&P 500 with a 63% advance over the past year.
Chart courtesy of StockCharts.com
Those who have followed me over the years understand my bullish case for TTWO stock.
Driven by massive global demand for its core Grand Theft Auto (GTA) franchise, which helped Take-Two Interactive Software establish a solid base for revenues upon which to grow, the company has managed to add to its revenue stream via the hugely successful NBA 2K franchise.
TTWO Stock to Benefit from This Strategic Move
While Take-Two Interactive Software currently has two major games in its portfolio and an assortment of other titles such as WWE 2K and Red Dead Redemption, the company has continued to look forward and search for other opportunities.
In what I view as a good strategic move, Take-Two Interactive Software will acquire privately held, Spain-based Social Point S.L. in a $250.0-million cash and stock deal.
What is intriguing about the move is that it will allow Take-Two Interactive Software to expand its revenue stream into the lucrative “free-to-play” mobile gaming segment. This is a natural progression for the company; something that its bigger rivals are also doing.
Social Point markets Dragon City and Monster Legends, two top-rated games that have garnered industry acclaim. The move into this space will open up new revenues ($90.8 million for 2016) and markets for Take-Two Interactive Software. (Source: “Take-Two Interactive Software Acquires Mobile Game Developer Social Point,” Business Wire, February 1, 2017.)
So, as gamers wait anxiously for the sixth edition of Grand Theft Auto, which could come in fiscal 2018 or fiscal 2019, Take-Two Interactive Software will continue to try to reduce its dependency on the game by adding new games and revenues.
But make no mistake about it: the Grand Theft Auto title is still an iconic global game that will surely drive up TTWO stock when it is next released.
I remain bullish on TTWO stock and see further upside to the stock price looking ahead two years.