Take-Two Interactive Software, Inc.

(NASDAQ Global Select)
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Bullish +75

Wedbush sends bold message on Take-Two stock after earnings

AI-generated analysis

📉 Take-Two Interactive (TTWO) stock closed down 4.42% at $227.55 on May 22, 2026, following a fiscal 2027 net bookings guidance of $8.0B-$8.2B that missed Wall Street's consensus of roughly $9.13B.

📝 Wedbush released a research note arguing that the low guidance was "overly conservative" and consistent with Take-Two's historical pattern of sandbagging in major launch years.

🎮 The firm reaffirmed its outperform rating, maintained a $300 price target, and kept TTWO on its Best Ideas List despite the earnings miss.

📅 Wedbush raised the probability that "Grand Theft Auto VI" will launch on November 19 from 75% to 90%, reducing the overhang of delay risk that has weighed on the stock for two years.

📊 The firm noted that the current $8.0B-$8.2B guidance range represents a floor rather than a forecast, suggesting actual performance could significantly exceed expectations.

🔍 Wedbush highlighted that TTWO trades at just 23x consensus FY28 EPS, which it argues does not fully price in the potential success of "GTA VI".

📈 Other analysts like Morgan Stanley and Wells Fargo also cited Take-Two's history of conservative forecasting, with Morgan Stanley maintaining a $280 target and Wells Fargo at $287.

🎯 Wedbush compared the current situation to fiscal 2020 when "Red Dead Redemption 2" launched, noting that initial conservative guidance was followed by massive sales exceeding estimates.

📦 For context, "GTA V" has sold over 230 million units lifetime, and Wedbush suggests "GTA VI" could match GTA V's install-base penetration if the pattern holds.

⚠️ The firm warned that a second delay past November 19 would likely reset the investment thesis and cause real damage to the stock price.

💰 Elevated marketing spend for Rockstar's pre-launch campaign beginning this summer is expected to pressure margins during the launch window.

📉 If management is actually signaling softness across other titles like NBA 2K or Zynga mobile, the guidance could be accurate and lead to further multiple compression.

🛡️ Wedbush advises existing shareholders that the May 22 drop was a "sell the news" reaction and suggests sitting tight through the November launch.

💡 For new investors, the setup is considered cleaner now due to compressed valuation, reduced delay risk, and a hard date catalyst on the calendar.

🎲 Wedbush cautioned that this remains a one-game-dependent thesis for the next six months, contingent on the historical sandbagging pattern holding true.

Risk Factors
  • Take-Two lowered its fiscal 2027 net bookings guidance to $8.0 billion to $8.2 billion, missing Wall Street consensus estimates of roughly $9.13 billion.
  • The stock closed down 4.42% at $227.55 on Friday, May 22, 2026, following the earnings miss.
  • Analysts Wells Fargo and Morgan Stanley have adjusted their price targets downward to $287 and $280 respectively, indicating bearish sentiment despite Wedbush's bullish stance.
  • Wedbush acknowledges a risk of a second delay to the November 19 launch date for "GTA VI," which would be damaging given previous slips.
  • Increased marketing spend from Rockstar Games beginning this summer could pressure margins during the launch window.
  • The stock's thesis is heavily dependent on the success of a single game, "GTA VI," creating concentration risk for the next six months.
  • If management is signaling softness across other segments like NBA 2K or Zynga mobile rather than sandbagging, the guidance miss could be real and further compress the multiple.
Full Analysis
Take-Two Interactive (TTWO) shares fell 4.42% on Friday, May 22, 2026, after the company lowered its fiscal 2027 net bookings guidance to $8.0 billion to $8.2 billion, missing Wall Street consensus estimates of roughly $9.13 billion. Despite the negative market reaction and the headline focus on the missed guidance, Wedbush Securities argues that investors have misinterpreted the move, suggesting the lower guidance was an intentional "floor" rather than a true forecast of future performance. The firm maintains its Outperform rating with a $300 price target and keeps Take-Two on its Best Ideas List, asserting that the stock's current valuation of 23x consensus FY28 EPS does not fully price in the anticipated success of the upcoming "Grand Theft Auto VI" launch. Wedbush highlights a historical pattern where Take-Two issues conservative pre-launch guidance that it subsequently exceeds once major titles ship, citing similar behavior following the release of "Red Dead Redemption 2." Consequently, the firm has raised its probability of an on-time November 19 launch for "GTA VI" from 75% to 90%, viewing the recent stock decline as a potential buying opportunity rather than a warning sign. While other analysts like Wells Fargo and Morgan Stanley also cite conservative forecasting habits, they have adjusted their price targets downward to $287 and $280 respectively, creating a spread where Wedbush's target implies roughly 32% upside from the recent close. The core of Wedbush's thesis rests on the potential for "GTA VI" to match or exceed the install-base penetration of "GTA V," which has sold over 230 million units lifetime, potentially resetting the FY28 earnings baseline and validating the current multiple. However, the firm acknowledges risks including a second delay to the November launch date, which would be damaging given previous slips, and increased marketing spend from Rockstar Games that could pressure margins during the launch window. Wedbush concludes that the May 22 drop was likely a "sell the news" reaction to guidance management never intended as a real forecast, advising existing shareholders to hold through the November launch while new entrants should size positions around the specific risk of a one-game-dependent thesis for the next six months.