Video game publisher Take-Two interactive software (TTWO) late Monday missed Wall Street’s fiscal second quarter targets and lowered its outlook for the December quarter and full year. TTWO shares collapsed during prolonged trading.
The New York City-based company earned an adjusted $1.30 per share on net bookings of $1.5 billion in the quarter ended September 30. Analysts polled by FactSet had expected earnings of $1.37 per share on revenue of $1.55 billion. Year-over-year, Take-Two’s profits declined 20%, while net bookings were up 53%.
For the current quarter, Take-Two forecast adjusted earnings of 84 cents per share on net bookings of $1.435 billion. That is based on the center of his guidance. Analysts were looking for earnings of $1.42 a share on revenue of $1.7 billion in the fiscal third quarter ended Dec. 31.
For the fiscal year ended March 31, Take-Two forecasts net bookings of $5.4 billion to $5.5 billion. The $5.45 billion midpoint is below Wall Street’s $5.9 billion target. Three months ago, Take-Two forecast net bookings of $5.8 billion to $5.9 billion by 2023.
TTWO shares fall after report
During today’s after-hours trading on the stock market, the TTWO share fell 13.3% to 94.00. During Monday’s regular session, TTWO stock fell a fraction to close at 108.40.
Take-Two owns game franchises such as ‘Grand Theft Auto’, ‘Red Dead Redemption’ and ‘NBA 2K’. With the recent acquisition of Zynga, Take-Two has added mobile games such as ‘Empires & Puzzles’, ‘Merge Dragons’ and ‘Words with Friends’.
“As we got to the end of the second quarter, we started to worry about the full year,” Chief Executive Strauss Zelnick told Investor’s Business Daily. “While the quarter itself was solid, it wasn’t at the top end of the range.”
He added, “We’re seeing some moderation in in-game spending on the mobile side. I attribute that to macroeconomic factors.”
Zelnick said he feels good about the company’s direction despite the economic headwind.
“All of our titles are working. We really continue to be a hit factory. And we’re seeing great engagement across the board,” he said.
Take-Two has a bad composite rating
Elsewhere Monday, rival Activision Blizzard (ATVI) reported that his game “Call of Duty: Modern Warfare 2” reached $1 billion in sales worldwide in its first 10 days of release. That surpassed the franchise’s previous 15-day record set by “Call of Duty: Black Ops 2” in 2012.
Last week, industry mate Electronic art (EA) missed the adjusted sales targets for the September quarter and lowered the outlook for bookings in the December quarter. However, it noted strong sales of EA Sports titles “FIFA 23” and “Madden NFL 23.”
EA ranks first out of 21 shares in IBD’s computer software gaming industry group, according to IBD Stock Checkup. Activision is in third place, but its shares are backed by Microsoft‘s (MSFT) pending the acquisition of the company. Regulatory oversight has delayed the closing of that deal.
TTWO stocks rank ninth in the group with a poor IBD Composite Rating of 37 out of 99.
IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories about consumer technology, software, and semiconductor stocks.
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