QS Research · Michael Burry's Scion Capital analyst template · 2006
TAKE TWO INTERACTIVE SOFTWARE INC (TTWO)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -6% · downside -35% · upside +23%
The market is not missing Grand Theft Auto VI; at 6.11x TTM EV/Sales and a 0.8% FCF yield, it is already paying for a successful launch. Section 13's base case at 5.75x TTM revenue of $6.69B is $202 (-6%), with downside to 4.0x at $139 (-35%) and upside to 7.5x at $265 (+23%), so the risk/reward is roughly 0.65:1 and offers no margin of safety. The dated Nov. 19, 2026 launch and FY2027 Net Bookings guidance of $8.0-$8.2B could re-rate the stock if delivered, but the current price already discounts that outcome while TTM EBIT is -$161.3M and net income is -$320.4M. Watch, not long: the catalyst is real and imminent, but the valuation rule is not met today.
Key numbers
- Share price: $214.87
- Market cap: $40.18B
- Latest financial period: TTM to Jun 30, 2026
- Revenue (TTM): $6.69B
- EV / EBITDA (TTM): 1168.0x
- Price / book: 11.13x
The 15 boxes
- ✓ 1. Long-form business notes
Take-Two earns substantially all revenue from interactive entertainment content—software, in-game virtual items and advertising, and live services—sold through digital, physical, platform and cloud channels under Rockstar, 2K and Zynga, with one reportable segment. FY2026 revenue was $6.66B and gross profit $3.81B, but operating income was -$104.2M and net income -$298.2M, while operating cash flow was $624.3M. Between the FY2021 and FY2026 annual reports, principal labels narrowed from five to three, development headcount rose from 5,079 to 9,998, and Rockstar franchise unit sales grew, while operating results swung from positive to negative.
- ✓ 2. Competitive advantage
Take-Two's advantage is a small number of owned hit franchises, not a broad moat: Grand Theft Auto alone was 12.4% of FY2026 net revenue and the top five franchises 54.3%, and the company reports one operating segment. The margin record does not show pricing power flowing to the bottom line — operating income was negative in each of FY2023 through FY2026 (-$1.17B, -$3.59B, -$4.39B, -$104.2M) and net income was negative every one of those years, although FY2026's $104.2M operating loss sits inside $725.7M of intangible amortization and operating cash flow turned positive at $624.3M. It competes with better-resourced publishers and with the three platform owners who are also its licensors, in an industry the 10-K itself describes as having relatively low barriers to entry and now AI-assisted imitation risk.
- ✓ 3. 10-Q takeaways
Q1 FY2027 (quarter ended June 30, 2026): Net Bookings fell 2.6% to $1,385.9M while GAAP net revenue rose 2.0% to $1,533.9M; gross margin fell to 57.5% from 62.9%, and GAAP results were an operating loss of $35.5M and a net loss of $34.1M ($0.18), with cost of revenue including a $43.4M impairment. Mobile revenue fell while console rose; recurrent consumer spending was 84.1% of GAAP net revenue. Cash fell to $1,446.1M from $1,638.1M at March 31, 2026 and Q1 operating cash flow was -$168.8M; no shares were repurchased. Management reiterated FY2027 Net Bookings of $8.0-8.2B and guided Q2 FY2027 Net Bookings to $1,620-1,670M with a GAAP net loss.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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