One of the most remarkable success stories in entertainment has been Grand Theft Auto V, and the numbers tell the tale.

Since its launch in September 2013, GTA V has generated over $8.6 billion in cumulative revenue, making it the single most successful entertainment product of all time.

Furthermore, the GTA franchise as a whole has generated over $9.5 billion in revenue since Grand Theft Auto V’s launch.

A significant slice of that total comes from GTA Online, where microtransactions alone brought in nearly $1 billion in fiscal year 2021.

Despite being more than a decade old, the game continues to pull in hundreds of millions annually, with regular content updates and a loyal player base fueling both engagement and spending.

Expectations are incredibly high for GTA VI, slated for release next year, with projections that it will generate billions for its developer, Take-Two Interactive Software (TTWO).

Take-Two’s shares are up 39% year-to-date.

GTA VI could pull in more than $3.2 billion in its first year, based on pre-order momentum and comparisons to other blockbuster game and movie releases

This includes over $1 billion from pre-orders alone.

Furthermore, GTA VI can launch at a premium price point, possibly exceeding $70.

However, the significant revenue and profit boost expected from GTA VI is a well-known factor, and much of this optimism may already be reflected in the company’s current stock valuation.

We can see what the market thinks through our Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections

In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today.

At the current stock price, the market expects the company’s Uniform return on assets (“ROA”) to skyrocket to 51% in the next five years from 24% this year.

While the upcoming release of GTA VI undoubtedly presents a massive opportunity for the company, investors must weigh this against a market that has already priced in substantial success.

With this in mind, it may be difficult for Take-Two to meet and exceed these lofty expectations and offer substantial upside for investors.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research

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