QS Research · Michael Burry's Scion Capital analyst template · 2006
TAKE TWO INTERACTIVE SOFTWARE INC (TTWO)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -32% · upside +88%
I use section 13's TTM-to-Jun-2026 revenue base of $6.69B; it is the conservative base because GTA VI is not yet in reported results. At the current 6.11x EV/Revenue, EV is $40.88B and equity is $40.18B, or $214.87/share, so the base case is 0%. Downside at NTES's 4.20x is $28.1B EV, $27.4B equity, about $147/share (-32%); upside at MSFT's 11.42x is $76.4B EV, $75.7B equity, about $405/share (+88%), but MSFT similarity is 0.00 so that is not a valid peer and I do not underwrite it. The market is paying for GTA VI and recurring mobile spend, but TTM EBIT is -$161.3M, net income is -$320.4M, FCF yield is 0.8%, and FY2027 guided net income is only $104-143M, so there is no deep-value margin of safety. This is a watch, not a long or short: the launch and short-interest catalyst could create a mispricing, but the rule is not met and current operating earnings do not support the price.
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
TTWO is a one-segment developer/publisher of interactive entertainment (Rockstar, 2K, Zynga) that monetises console, PC and mobile games through a mix of initial sales, virtual currency, add-on content, in-game purchases and in-game advertising. Revenue grew every year in the window, from $3.37B in FY2021 to $6.66B in FY2026, with gross profit rising from $1.84B to $3.81B, but operating income turned negative from FY2023 onward (-$104.2M in FY2026) and net income was -$298.2M in FY2026, worse than the operating loss because of non-operating items. The FY2026 10-K is dominated by scale-up (headcount 12,909, GTA franchise sold-in over 465M units) and by the scheduled November 19, 2026 release of Grand Theft Auto VI in fiscal 2027. Between the FY2021 and FY2026 10-Ks the label set changed from Rockstar/2K/Private Division/Social Point/Playdots to Rockstar/2K/Zynga.
- ✓ 2. Competitive advantage
The advantage is the hit franchise, not the cost structure: GTA alone was 12.4% and the top five franchises 54.3% of FY2026 net revenue, and the company funds 9,998 product-development staff out of 12,909 employees (March 31, 2026). Gross profit rose to $3.81B in FY2026 from $2.24B in FY2024, yet operating income was negative in every year FY2023-FY2026 (-$1.17B, -$3.59B, -$4.39B, -$104.2M), so the return history shows no proven pricing power converting into operating profit. Competitive position is also constrained: Sony/Microsoft platforms were 39.0% of FY2026 revenue and the publisher competes with EA, Epic, Tencent, Sony, Microsoft, Nintendo and a long tail of low-barrier mobile entrants. Cash generation only turned decisively positive in FY2026 ($624.3M operating cash flow), which reads as release-cycle driven rather than a durable annuity.
- ✓ 3. 10-Q takeaways
Q1 FY2027 (quarter ended June 30, 2026) was a low-growth, margin-pressured quarter ahead of Grand Theft Auto VI: net revenue rose 2.0% to $1,533.9 but Net Bookings fell 2.6% to $1,385.9, gross margin dropped to 57.5% from 62.9%, and the company swung to a $(35.5) loss from operations versus $21.6 of income a year earlier. The reported $(34.1) net loss was cushioned by a $15.2 tax benefit, so operating losses were wider than the net line implies. Cash flow turned sharply negative (operating cash $(168.8) vs $(44.7)), cash fell to $1,446.1 from $1,638.1 at March 31, 2026, and no shares were repurchased. The quarter's main forward catalyst is Grand Theft Auto VI on November 19, 2026, with pre-orders already open.
- ✓ 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.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.