Take-Two Interactive (NASDAQ:TTWO) is the video game development company behind some of the industry’s largest franchises, including the likes of Grand Theft Auto and Borderlands.
Over the past year, the share price has soared by more than 50 percent on both the business’ current financials and its upcoming releases.
So, how high will Take-Two stock go, and is now the time to buy the video game major?
What’s Driving TTWO Higher?
Arguably the largest factor in Take-Two’s rising prices right now is the upcoming 2026 release of the latest game in its Grand Theft Auto franchise, namely GTA VI. The game is expected to generate as much as $3 billion in sales in its first year alone.
For reference, the entire net bookings from Take-Two Interactive over the last 12 reported months totaled $5.6 billion. Other major releases expected in the near future include Borderlands 4 and Mafia: The Old Country, both of which are slated for release later this year.
Although GTA VI is clearly a major driver of heightened investor expectations, it’s not the only thing to like about Take-Two right now. The business is also producing very solid current growth, mostly by increasing its in-game purchases to create recurring revenue from games that have already been sold. In FY2025, for instance, Take-Two delivered 6 percent growth in bookings, a rate that climbed to an impressive 17 percent in Q4.
Management posted a large loss of $4.5 billion up from $3.8 billion in FY2024 but this includes $3.6 billion of goodwill impairment. For the current fiscal year, management expects to see Take-Two’s net losses narrow significantly to the range of $439 million to $499 million. If the business successfully reduces its losses by such a large margin, it could indicate a path to profitability for Take-Two in the not-too-distant future.
Take-Two is also set to benefit from broader trends in the video game industry. Through the rest of this decade, the industry is expected to keep growing at a compounded rate of over 12 percent. As such, major video game makers with existing brand moats are very likely to see strong growth over the next five years. Take-Two falls heavily into this category, and the business seems to be in a good position to ride the wave of rising spending from video game consumers.
Take-Twos Risks
Right now, TTWO seems to present two major risks investors may want to be aware of. First and foremost, the stock is currently trading at a rather high valuation on expectations of future growth.
Even with the CFP reporting a significant loss over the last 12 months, shares are still priced at 7.4 times sales and 20.4 times book value. Although 17 of the 21 analysts are offering buy ratings on TTWO, the projected upside for the stock at the moment is a very modest 1.9 percent over the next 12 months to a consensus target of $243.05.
The other problem investors may find with Take-Two is the fact that management has a longstanding habit of diluting the outstanding shares, the number of which have risen on a year-over-year basis in every quarter since 2020.
The net result is the number of shares have mushroomed from 115 million to 175 million and that will be compounded by the May announcement a further issue of $1 billion in common stock. This decision to consistently issue new shares is alarming because it creates the risk of gradually eroding the ownership stakes of shareholders who own the stock over several years.
Together, these two factors raise the concern that investors could be overpaying for a stock that is likely to face ongoing dilution. Even with the business itself performing well and some fairly significant growth catalysts on the horizon, these factors may very well eventually put downward pressure on TTWO.
So, How High Can Take-Two Go?
Although 17 of the 21 analysts are offering buy ratings on TTWO, the projected upside for the stock at the moment is a very modest 1.9 percent over the next 12 months to a consensus target of $243.05.
With most of the good news and the expectations for GTA VI already priced in, TTWO may not have much room for upward mobility right away without delivering another quarter of stronger-than-expected results. The run over the last year has likely brought TTWO to the point of being fully valued if not somewhat overvalued. As such, the business will likely have to maintain a decent rate of revenue growth just to maintain its present valuation.
Going into 2026, the forecast is for share prices rise stemming from the new Grand Theft Auto game bolstering revenues. That higher level of revenue is set to help the business move toward net profitability, and that in turn will domino into investor sentiment. With existing games also generating more recurring revenue, Take-Two has a very solid formula for long-term sales growth.
As an example of how TTWO’s returns could play out, let’s suppose that GTA VI and the other titles slated for release cumulatively added $3 billion to Take-Two’s top line by 2027. Even discounting any extra growth that might occur between now and then and assuming a contraction of the price-to-sales ratio to 6.0, shares of TTWO would still fall somewhere around $295.
Given that these assumptions are quite conservative and include a reduction in the price-to-sales ratio as the stock climbs, it seems quite likely that TTWO could still have significant upside as long as nothing happens to interrupt the expected revenue boosts from GTA VI and other new titles.
Take-Two is a bit of a dicey stock because a good part of its current valuation rests on the performance of games that haven’t been released yet. The stock also has a history of being diluted, something that could exert downward pressure on the appreciation of TTWO shares.
For those willing to run these risks in the hopes of higher-than-average returns, though, Take-Two could be a good play on growth in the video game industry with a wide moat and a large established audience of gamers.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.