Take-Two Interactive Q1 earnings: What to expect

Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is scheduled to report first-quarter 2020 earnings results on Monday, August 5, after the regular trading hours. The company will be hoping to continue the rally that it has been witnessing since March this year when it sunk to a 52-year low driven by industry-wide sell-off.  

Riding on the popularity of its hit titles – NBA 2K, Grand Theft Auto and Red Dead Redemption – the game giant is expected to see a 26% jump in Q1 revenues to $363.8 million. Red Dead Redemption 2, released last year, has sold about 25 million copies so far.

Spanish mobile game developer Social Point, which it acquired in 2017, is likely to add leverage to top-line growth, despite stiff competition from Glu Mobile (NASDAQ: GLU) and Zynga (NASDAQ: ZNGA).

However, higher expenses are likely to hinder the transfer of benefits down the line for Take-Two. Analysts expect the New York-based firm to report earnings of 2 cents per share in Q1, compared to 12 cents per share it reported last year, due to higher selling and marketing expenses, in a bid to compete with industry veterans Activision Blizzard (NASDAQ: ATVI) and Electronic Arts (NASDAQ: EA).   

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Take-Two is currently trading near its 12-month average price target, hence a strong rally post earnings may not happen. The stock has an average Strong Buy rating in the market.

On Wednesday, Electronic Arts reported better-than-expected first-quarter results, pushing the stock up 3%. EA’s top line rose 6% to $1.2 billion and net bookings declined modestly by 1% to $743 million. 

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