Strong Franchises Keep This Stock Rolling
Today’s stock is riding a growing trend in the entertainment industry that is getting more push through the spread of mobile devices.
Betting on stocks that gain from growth in the mobile gaming segment is a simple and effective method of picking the multibaggers of tomorrow. Strong gaming stocks stand to gain in the coming years, since video games are popular with, not only millennials, but every other generation as well.
With the plethora of video games today, we are spoiled for choice. However, there is one stock that has stood the test of time and could end up providing further triple-digit gains for its investors.
Case in point being Take Two Interactive Software Inc (NASDAQ:TTWO), which is famous for highly popular titles like Grand Theft Auto and Civilization. The company is entering diverse fields that could further strengthen its hold on the gaming community, regardless of the age group. This signals that more good times are ahead for Take-Two stock.
With the rise of the mobile revolution, the gaming trend has penetrated deep into our lives. As per the latest “Global Games Market Report” by Newzoo, around 2.2 billion gamers across the world are likely to generate almost $109.0 billion in game revenues in the year 2017. This represents an increase of 7.8% from the previous year.
Digital game revenues are expected to touch $94.4 billion (87% of the global games market). Mobile is the most lucrative segment, with smartphone and tablet gaming growing 19% year-over-year to almost $46.0 billion, claiming 42% of the market. In 2020, mobile gaming will represent just more than half of the total games market. (Source: “The Global Games Market Will Reach $108.9 Billion in 2017 With Mobile Taking 42%,” Newzoo, April 20, 2017.)
Take-Two is well positioned to gain a big proportion of this market, as evident by its recent move. The company moved into mobile games by buying Social Point for about $250.0 million in February this year. (Source: “Take-Two Interactive Software Acquires Mobile Game Developer Social Point,” Take Two Interactive Software Inc, February 1, 2017.)
This is a big move for the company, which has been into console and personal computer (PC) gaming so far. Strauss Zelnick, the CEO of Take-Two, said that, with this acquisition, the company has further diversified its business and has greatly improved its position in the fast-growing free-to-play mobile gaming space. With this foray, TTWO stock is likely to scale new heights.
Not only this, the video game publisher has also teamed up with the National Basketball Association (NBA) to launch a professional video game league. NBA 2K eLeague will be centered around Take-Two’s NBA 2K franchise and represent the game maker’s first major push into the world of competitive gaming. The e-sports industry is still in its infancy, but is already attracting huge crowds and attention, which points toward higher growth in the coming years.
On the earnings front, the company announced an upbeat $0.89 per diluted share, in its recently-announced fiscal fourth-quarter results. The company also reported impressive growth of 26% in its net revenue for fiscal 2017, on the back of the success of Grand Theft Auto V, Grand Theft Auto Online, and NBA 2K17.
Although the TTWO stock price was hit due to the next edition of one of its highly popular video games being postponed until 2018, the weakness is unlikely to continue for long. The company expects the sales for fiscal 2018 to be more than $2.5 billion (Source: “ADDING and REPLACING Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal Year 2017,” Take Two Interactive Software Inc, May 23, 2017.)
Take-Two stock has grown by a stellar 600%+ over the past five years, and more than 115% over the past year. The following stock chart shows the phenomenal run by TTWO stock.
Chart courtesy of StockCharts.com
The Bottom Line on Take-Two Stock
Take-Two is focused on developing the most compelling interactive entertainment franchises in the sector, and delivering them on every platform that exists. The recent financial results proved once again that demand for the company’s entertainment offerings remain strong, and that this demand is likely to get even better.
With the gaming industry holding lots of promise in the coming era of virtual reality, investments like Take-Two stock hold a lot of potential that could translate into big returns for investors.