Is It Time To Reassess Take-Two Interactive Software (TTWO) After Recent Share Price Weakness?

• If you are wondering whether Take-Two Interactive Software's current share price lines up with its underlying worth, this article will walk through what the numbers suggest and where the gaps might be.
• The stock last closed at US$211.48, with returns of 5.9% over 7 days, a 13.0% decline over 30 days, a 15.9% decline year to date, a 0.2% decline over 1 year, 81.2% over 3 years, and 23.8% over 5 years. This gives you a sense of both recent pressure and longer term strength.
• Recent moves in Take-Two have arrived against a backdrop of ongoing interest in major gaming franchises and the broader sector, with investors watching closely for any updates related to key titles and pipeline developments. At the same time, the company continues to sit in the spotlight as a large player in interactive entertainment, which often keeps expectations and scrutiny high even when there is no single headline driving the price.
• On our valuation checklist, Take-Two scores 2 out of 6, as shown in the valuation score. Next we will look at how different valuation methods treat the stock and finish with a way to go beyond the usual models to get a clearer read on value.

Take-Two Interactive Software scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Take-Two Interactive Software Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes projected future cash flows, then discounts them back to today to estimate what the whole business might be worth right now.

For Take-Two Interactive Software, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow sits at about US$470.6 million. Analysts have provided explicit free cash flow estimates for the next several years, and Simply Wall St then extrapolates those further out, with projected free cash flow for 2035 of roughly US$3.5 billion.

After discounting those projected cash flows back to today, the model arrives at an estimated intrinsic value of about US$225.10 per share. Compared with the recent share price of US$211.48, this implies the stock is trading at roughly a 6.1% discount to that DCF estimate, which is a relatively small gap.

Result: ABOUT RIGHT

Take-Two Interactive Software is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Take-Two Interactive Software.

Approach 2: Take-Two Interactive Software Price vs Sales

For companies where current earnings do not give a clear picture, the P/S ratio is often a useful yardstick because it compares what investors are paying to the revenue the business is already generating.

Growth expectations and risk still matter, since a higher P/S is usually associated with companies that investors expect to grow faster or view as less risky, while lower multiples tend to reflect more muted expectations or higher uncertainty.

Take-Two Interactive Software currently trades on a P/S of 5.97x. That is above the Entertainment industry average P/S of about 1.50x and also higher than the peer average of 4.68x. As a result, the stock carries a premium relative to both the broader group and closer comparables.

Simply Wall St’s Fair Ratio for Take-Two is 3.99x. This is a proprietary estimate of what a “normal” P/S might look like after considering factors such as earnings growth profile, profit margins, industry, market cap and company specific risks.

This Fair Ratio can be more informative than a simple industry or peer comparison because it ties the multiple to the company’s own fundamentals and risk factors rather than assuming that averages fit every business equally well.

Compared with the current 5.97x P/S, the Fair Ratio of 3.99x indicates that the shares are trading above that modelled range.

Result: OVERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.

Upgrade Your Decision Making: Choose your Take-Two Interactive Software Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company, linked directly to your own forecast for revenue, earnings and margins, and then to a fair value you can compare with the current price.

On Simply Wall St’s Community page, Narratives are an easy tool used by millions of investors to set out their assumptions, see the implied fair value, and then decide whether a stock looks interesting by comparing that value with where it trades today.

Narratives also update as new information such as earnings, guidance or news is added to the platform, so your story and valuation stay aligned with the latest data instead of being a one off spreadsheet exercise.

For Take-Two Interactive Software today, one Narrative on the platform applies a fair value of about US$88.99 per share, while another applies about US$301.00 per share. This shows how two investors can look at the same company, use different assumptions about growth, margins, discount rates and future P/E, and arrive at very different conclusions about whether the current price of roughly US$211.48 feels high or low.

For Take-Two Interactive Software, however, we will make it really easy for you with previews of two leading Take-Two Interactive Software Narratives:

🐂 Take-Two Interactive Software Bull Case

Fair value in this bullish narrative: about US$278.23 per share

Implied pricing gap versus last close: roughly 24.0% below this fair value

Revenue growth assumption: about 15.2% a year

• Analysts in this view see mobile, in game spending and broader distribution lifting revenue and margins, supported by GenAI tools and a deeper content slate.
• The narrative sets out detailed assumptions for revenue growth, margin expansion and earnings by 2028, then links them to a P/E of about 59.9x and a consensus price target close to US$262.02.
• Key risks flagged include dependence on major franchises, higher development costs, changes in gamer behaviour, and competition across platforms and distribution channels.

🐻 Take-Two Interactive Software Bear Case

Fair value in this more cautious narrative: about US$88.99 per share

Implied pricing gap versus last close: roughly 137.7% above this fair value

Revenue growth assumption: about 12.4% a year

• This author argues the share price already reflects high expectations around Grand Theft Auto VI and mobile, while reported margins are weighed down by heavy development and acquisition related costs.
• The narrative highlights the role of recurrent consumer spending and mobile in smoothing results, but questions whether future cash generation fully justifies current multiples after adjusting for accounting effects.
• It also points to concentration in key titles, valuation sensitivities around the release pipeline, and the need to weigh analyst targets and institutional interest against your own tolerance for execution risk.

Do you think there's more to the story for Take-Two Interactive Software? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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