Take-Two Interactive Stock Looks to Level Up with Earnings

Does this gaming stock still have noteworthy growth potential?

May 14, 2021 at 12:54 PM
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The shares of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) are up 1.7% to to trade at $165.46 this afternoon, though a catalyst for this positive price action was not immediately clear. The equity has been gearing up for its fourth-quarter earnings report, though, which is due out after the close on Tuesday, May 18. Below, we will take a look at how the stock has performed on the charts of late, and explore some of the options activity surrounding TTWO ahead of the event.

On the charts, Take-Two Interactive stock has been cooling off from a Feb. 8, record high of $214.91. A number of early March bear gaps brought the equity back to the $161 mark, however, marking its lowest level since November. Plus, both the $186 mark and the 60-day moving average have acted as resistance over the last couple of months. Nonetheless, the security still carries a notable 26% year-over-year lead.

A look at the equity's history of post-earnings reactions over the past two years shows a generally positive response. During its last eight reports, four of these next-day sessions were higher, in addition to one breakeven session in November 2019. TTWO averaged a post-earnings swing of 5.6% the last eight quarters, regardless of direction. Yet this time, the options market is pricing in a higher move of 7.9%.

In terms of the company’s revenue and net income growth, Take-Two Interactive's revenue increased nearly 16% in 2020, while its net income grew 21%. In addition, TTWO's revenues are up 72% since 2018, and its net income has grown 133% in the same time period.

Overall, the gaming name seems to be on the right path for another year of substantial growth, despite its large market cap of $19.11 billion. What's more, the company holds $2.55 billion in cash, which should allow TTWO to continue expanding into the future, while its debt total sits at a relatively low $177.5 million.

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