Value
5.3/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 5.8 |
| Fwd P/E | 5.4 |
| PEG | 3.5 |
| Analyst target | 6.0 |
- ▸Forward P/E: 23.6x
- ▸PEG: 3.29
TTWO · Why this verdict
Why Take-Two Interactive Software, (TTWO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Take-Two Interactive faces a death cross downtrend and below-floor business quality, with top five customers accounting for 80.6% of revenue and five franchises generating 54.3% of sales, though analysts see 29% upside and the company generates 22% free cash flow margins.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite GAAP operating losses, the company generates 22% free cash flow margins and 3.6% FCF yield, demonstrating that cash generation from existing games and recurring revenue streams is substantially better than reported earnings suggest. Quality breakdown | Free cash flow margin remains above 15% over the next 12 months, confirming the underlying cash generation is durable. | →Stable |
| CounterHigh FCF margins in gaming can reflect under-investment in new titles; if the company needs to increase development spending for future launches, free cash flow could compress sharply. | ||
Five franchises generate 54.3% of total sales and the top five customers account for 80.6% of revenue, creating extreme concentration that means a single underperforming title launch or the loss of a platform relationship could swing results dramatically. Bear case | Revenue from the top 5 franchises falls below 45% of total sales over the next 2 fiscal years as the catalog diversifies. | →Stable |
| CounterMega-franchise concentration in gaming is normal; Grand Theft Auto-level titles generate recurring monetization for years after launch and justify higher revenue concentration than typical media companies. | ||
The stock has triggered a death cross with the 200-day moving average slope flat and price at the lower end of its range, while the put/call ratio of 1.81 indicates more bearish than bullish options positioning, reflecting broad uncertainty about the timing of the next major title release. Momentum breakdown | The stock rises above its 200-day moving average on sustained volume within the next 5 months, signaling a trend reversal. | →Stable |
| CounterGaming stocks often trade sideways for extended periods between major title launches, and a flat 200-day slope is less severe than a sharply declining one. | ||
Analysts see 29% upside to $251.19, but the company has missed earnings in 2 of the last 4 quarters with the worst miss at negative 87%, creating a pattern of high analyst optimism that has not been consistently validated by reported results. Sentiment | The company delivers positive earnings surprises in at least 3 of the next 4 quarters, narrowing the gap between analyst targets and fundamental reality. | →Stable |
| CounterThe two beat quarters showed very large positive surprises of 38% and 128%, suggesting that when the company executes, it does so decisively and could re-rate quickly on a successful title launch. | ||
Despite GAAP operating losses, the company generates 22% free cash flow margins and 3.6% FCF yield, demonstrating that cash generation from existing games and recurring revenue streams is substantially better than reported earnings suggest.
→StableQuality breakdown
- Expectation
- Free cash flow margin remains above 15% over the next 12 months, confirming the underlying cash generation is durable.
CounterHigh FCF margins in gaming can reflect under-investment in new titles; if the company needs to increase development spending for future launches, free cash flow could compress sharply.
Five franchises generate 54.3% of total sales and the top five customers account for 80.6% of revenue, creating extreme concentration that means a single underperforming title launch or the loss of a platform relationship could swing results dramatically.
→StableBear case
- Expectation
- Revenue from the top 5 franchises falls below 45% of total sales over the next 2 fiscal years as the catalog diversifies.
CounterMega-franchise concentration in gaming is normal; Grand Theft Auto-level titles generate recurring monetization for years after launch and justify higher revenue concentration than typical media companies.
The stock has triggered a death cross with the 200-day moving average slope flat and price at the lower end of its range, while the put/call ratio of 1.81 indicates more bearish than bullish options positioning, reflecting broad uncertainty about the timing of the next major title release.
→StableMomentum breakdown
- Expectation
- The stock rises above its 200-day moving average on sustained volume within the next 5 months, signaling a trend reversal.
CounterGaming stocks often trade sideways for extended periods between major title launches, and a flat 200-day slope is less severe than a sharply declining one.
Analysts see 29% upside to $251.19, but the company has missed earnings in 2 of the last 4 quarters with the worst miss at negative 87%, creating a pattern of high analyst optimism that has not been consistently validated by reported results.
→StableSentiment
- Expectation
- The company delivers positive earnings surprises in at least 3 of the next 4 quarters, narrowing the gap between analyst targets and fundamental reality.
CounterThe two beat quarters showed very large positive surprises of 38% and 128%, suggesting that when the company executes, it does so decisively and could re-rate quickly on a successful title launch.
Per-dimension breakdown
Quality
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 7.5 |
| Op margin | 0.9 |
| Net margin | 0.0 |
| Current ratio | 4.7 |
| FCF quality | 6.0 |
| Moat | 5.1 |
| Piotroski F | 4.4 |
- ▸FCF-positive but moderate margins (FCF margin 22%, FCF yield 3.3%)
- ▸No competitive moat
Growth
4.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.0 |
Momentum
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.3 |
| Analyst rating | 9.0 |
| Price target | 7.6 |
- ▸LLM news sentiment: +0.45 (n=8)
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Notable insider selling — $134,160,552 (0.306% of mkt cap)
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.0 |
| quality rank | 2.0 |
| growth rank | 2.0 |
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.2 |
| support resistance | 3.5 |
| 52w position | 7.8 |
Risk (lower is worse)
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.7 |
| days to cover | 7.7 |
| volatility | 2.8 |
| put call | 0.0 |
| implied vol | 2.0 |
| max pain risk | 3.0 |
| beta | 7.1 |
| debt equity | 5.9 |
- ▸Elevated put/call: 5.64
- ▸High IV: 68%
- ▸Above max pain $115
- ▸Concentration risks: 3 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (8)
- MOMENTUM:6.6>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.35
- NEWS_BOOST:ANALYST_CLUSTER(6)
- EARNINGS_PROXIMITY:46d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.6<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=6.6>=5.0 recovering
Reward-to-Risk
0.61
Upside
+7.5%
Downside
12.4%
Sizing output
AVOID
SetupMOMENTUM_CONT — Trend continuation, RSI 69, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Sentiment at 8.0 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:0.6<1.5@spot.
The strongest dimensions are Sentiment at 8.0, Catalyst at 7.6, and Momentum at 6.6; the weakest are Peer rank at 2.8, Quality at 3.2, and Insider at 3.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.61 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Five franchises generate 54.3% of total sales and the top five customers account for 80.6% of revenue, creating extreme concentration that means a single underperforming title launch or the loss of a platform relationship could swing results dramatically.
Trip ifRevenue from top 5 franchises rises above 60% of total sales in any reported period.
- P2The stock has triggered a death cross with the 200-day moving average slope flat and price at the lower end of its range, while the put/call ratio of 1.81 indicates more bearish than bullish options positioning, reflecting broad uncertainty about the timing of the next major title release.
Trip ifStock price drops below $195, more than 9% below the current $216.23, accelerating the downtrend.
- P3Despite GAAP operating losses, the company generates 22% free cash flow margins and 3.6% FCF yield, demonstrating that cash generation from existing games and recurring revenue streams is substantially better than reported earnings suggest.
Trip ifFree cash flow margin falls below 10% for at least 2 consecutive quarters.
- P4Analysts see 29% upside to $251.19, but the company has missed earnings in 2 of the last 4 quarters with the worst miss at negative 87%, creating a pattern of high analyst optimism that has not been consistently validated by reported results.
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters.