ok hear me out on ttwo. been digging into this for a few months and i think theres something obvious nobody is actually talking about.
gta vi launches nov 19. rumored budget is 2-3.4 billion. konvoy estimates 2B, dan dawkins from gta 6 oclock newsletter argues 3.4B based on payroll math over 6 years. for context gta v cost 265m total. so this is 8-13x more expensive.
heres the thing nobody addresses. at 80 retail and ~48 net to publisher after platform fees, gta vi needs to sell 42m units on launch alone to break even on 2B budget. 71m on 3.4B. no aaa game has ever sold 70m+ year one. gta v did 32m year one and that was record breaking.
so one of two things has to be true. either the budget numbers are wrong (possible but multiple analyst sources converge here) or rockstar built revenue infrastructure that recovers the spend OVER YEARS not at launch.
that second one is the platform thesis. august 2023 rockstar acquired cfx.re, the fivem team. fivem had 270k peak concurrent users on a 10 year old game running custom roleplay servers. rockstar SUED these guys in 2015 and sent private investigators to their homes. eight years later they bought them. thats not a defensive acquisition.
if gta vi online integrates fivem tech persistent worlds + ugc + creator economy youre looking at roblox style platform with adult content and aaa quality. roblox trades at 30B market cap on 3B revenue. ttwo is at 45B.
bofa target 320 uses 26x p/e. ttwos own 5 year historical p/e is 40.8x. just reverting to its own historical multiple gets you 370-400 without any platform credit. platform thesis is gravy on top.
position: over 100 shares at 213
anyone else following ttwo into the launch?
why ttwo is probably mispriced ahead of gta 6 launch
byu/Harmieh instocks
Posted by Harmieh
13 Comments
I’m not sold on the idea of a Roblox-adjacent creator platform, but the real revenue for GTA VI will absolutely be online currency and microtransactions.
Sell the news
considering there are 97 million ps5’s out there. Not sure if that includes ps5 pro’s. GTA6 is releasing first on console. There is a very good chance it will hit 70million year one.
I think they’re going to get a lot closer to 70m copies than you think. It’s the most anticipated game of our lifetime.
This thing might sell 25m day 1.
Of anything, your post makes me think a short is in order.
Inb4 priced in comments even though plebbitors said the same when it was trading in the $100-$150 range
First, any news stating it cost $2B to make is lying. There have been no official numbers released and all the numbers online are just pure speculation.
Second, why would the game need to break even on day one??? Most big games take week or months to break even and become profitable over the long run. GtaV is still printing money to this day. What are you acting like it’s over if they don’t break even on day one, that’s crazy
GTAV online is still earning them about $1b/yr, so GTAVI development costs have already more than be recouped.
Great post, which is rare on here these days.
Very interesting insight.
Been long TTWO a while now, it always runs up when a GTA is released.
Only thing I disagree on is 70m sales, they can hit this, I think this GTA will break every record imaginable. You have the young generation and now you have a lot of the older generation e.g 30-50 who will also buy it, it the game of their childhood/teen years, this demand is going to be unprecedented imo.
TTWO are still bringing in San Andreas revenue from online play, if this new GTA lives up to the hype, TTWO have many, many years of huge consistent revenue ahead.
Your post have made me more bullish. It’s now all down to this game being a flop or not, huge pressure, fingers crossed
They are priced in. You might get few $ by the launch but you won’t double or triple your gains.
But investing is about patience. They night annonce new stuff later such as online mode, PC release etc.. then it will rocket again
I sold half of my TTWO at $250 last year to get ahead of the AI surge but it’s still like 20% of my portfolio. I think you are correct that people are really discounting the live service recurring revenue potential of GTA6. I expect it to go north of $300 in 2027 which is why I didn’t sell all of it
the part nobody is talking about is the options side because the catalyst is so dated that the IV structure is already telling you something. nov 19 launch is locked in so anyone buying naked calls into nov expiration is going to eat the iv crush even if the stock pops on launch. the way to actually play directional bullish on a known catalyst is selling IV through bull put spreads at lower strikes like 200/180 on the nov or dec cycles, you capture the iv crush mechanically and you only need ttwo to not collapse below 200 to win.
on the math nobody flagged: gta online from gta v is still printing 1b+ per year a decade after launch so the framing of “needs 70m units to break even at launch” treats the game like a one shot product when its actually a 10 year platform. the platform thesis isnt fivem dependent either, just gta online v2 with current monetization rates against 100m+ ps5/xbox install base does the work.
the iv30 vs realized gap on ttwo has been worth tracking through thetaedge for the catalyst window, paired with tradingview for chart context. you can see where the market is pricing the launch expectation vs how the stock actually trades on prerelease news drops. similar setup played out on nintendo into mario kart world launch where realized was meaningfully lower than implied.
position disclosure on my end is small ttwo i bought way before the rally, holding through launch but not adding here.
Couple points I disagree with –
Why does it need these sales numbers in year one? It will get to this number eventually. Also, microtransactions are going to be a massive revenue stream for GTA6 that are kind of ignored in your post. GTA5 makes $1 million a week as a 13 year old game
Also your argument I think is that it should be priced at how Roblox trades if they even come close to being successful at a roblox style game? The better argument, and how the market will see it, is that you add Roblox’s evaluation into Take Two if they are successful at implementing that.
Roblox doesn’t have the most anticipated game of the last decade, NBA/WWE/2K yearly releases, massive IPs like Bioshock, Borderlands, and Red Dead and a huge diverse mobile portfolio like Zynga