Take-Two Interactive rebounds on solid Grand Theft Auto sales after Trump criticizes violent video games
- Take-Two Interactive's strong earnings results helped the company rebound 7.3% from a slump in video game stocks sparked by President Donald Trump's comments linking violent games to mass shootings.
- The video game developer reported revenue and profit that beat Wall Street's forecasts, thanks to a better-than-expected performance from the Grand Theft Auto franchise.
- Shares in video game stocks stumbled on Monday after Trump said: "We must stop the glorification of violence in our society. This includes the gruesome and grisly video games that are now commonplace."
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Take-Two Interactive bounced 7.3% Tuesday from a broad slump in video game stocks after reporting better-than-expected revenue fueled by the continued popularity of the Grand Theft Auto franchise.
Here are the key numbers from Take-Two's earnings:
- Revenue: $422 million, up 39% from last year, and compared to $357 million expected by analysts
- Earnings per share: $0.27 compared to $0.03 expected by analysts
President Donald Trump slammed violent video games on Monday after two deadly mass shootings took place over the weekend. Shares of developers like Electronic Arts, Activision Blizzard, and Take-Two all traded lower on the comments.
"We must stop the glorification of violence in our society," Trump said." This includes the gruesome and grisly video games that are now commonplace."
Take-Two's ability to get existing customers to spend money within already purchased games, also known as recurrent consumer spending, helped its results. More than half of Take-Two's revenue during the quarter came from in-game purchases, which grew 31% from the same period last year.
Sales and recurrent spending for Grand Theft Auto V and Grand Theft Auto Online, the type of violent game Trump was referring to in his comments, exceeded expectations for the quarter. The game also ranked in the top ten for the most combined digital and physical sales in the US for five out of the last six months, according to the company.
"The title has now sold in more than 110 million units and remains one of the most revered and successful entertainment experiences across all art forms of all time," CEO Strauss Zelnick said on an earnings call.
Take-Two's operating results were also boosted by the NBA 2k franchise. NBA 2k19, the developer's latest basketball game, rose to become the company's best-selling sports game of all time with 12 million units purchased.
The company also raised its outlook for 2020 following the better-than-expected results. Take-Two now predicts net bookings will reach between $2.6 billion and $2.7 billion, up from a range of $2.5 billion to $2.6 billion
Take-Two was up 19% year-to-date as of Monday's close.
