Many gamers and investors want to own a piece of Rockstar Games because the company makes and markets Grand Theft Auto and Red Dead Redemption 2, both popular and fast-growing gaming franchises.
Parents are interested in buying Rockstar Games stock because they see how much time and money their kids spend on Grand Theft Auto and Red Dead Redemption 2.
Rockstar Games Stock
You can buy Rockstar Games stock by purchasing shares in Take-Two Interactive. You cannot buy Rockstar Games stock directly because Rockstar is one of 17 individual companies that are wholly owned subsidiaries of Take-Two Interactive Software Inc.
Take-Two Interactive Software Inc., based in New York City, has 99 subsidiary companies incorporated in North America, Europe, and Asia.
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Note: This is an unbiased research report. The author or Liberated Stock Trader is not affiliated, paid by, or owns stock in any of the companies mentioned in this report.
Rockstar Stock
You can buy stock in Rockstar, the makers of Grand Theft Auto, by buying TTWO shares. Grand Theft Auto V is one of the critically acclaimed and commercially successful video games of all time, with 145 million copies sold, according to the TTWO financial reports.
Rockstar Games sold over 350 million Grand Theft Auto games between 1997 and August 2021. Rockstar sold five million Grand Theft Auto V copies between May and August 2022.
Who owns Rockstar Games?
Take Two Interactive Software Inc. (TTWO) is the current owner of Rockstar Games. TTWO is a leading games developer and publishing house that owns 2K games.
Rockstar Games Stock Symbol (TTWO)
The stock ticker symbol for Rockstar Games, the publisher of Grand Theft Auto, is TTWO, representing Take Two Interactive Software Inc., commonly known as Take2Games. Take2 trades on the NASDAQ stock exchange as TTWO.
Take2Games is the parent company that owns Rockstar Games, 2K, Socialpoint, Ghost Story, Private Division, and other game publishers.
Rockstar Stock Price
Rockstar/Take-Two Interactive’s stock price has risen 380% in the last five years. This values Take2 at $20 billion with a stock price of around $170.
According to Stock Rover, Take-Two Interactive is overvalued because its current margin of safety is -17 %. The Margin of Safety is the calculation investors use to value a company based on its forward discounted cash flow. This means that investors may be overpaying for Rockstar stock.
Take2 Interactive can generate some cash. It reported a quarterly operating cash flow of $148.24 million and a quarterly ending cash flow of $2.157 billion on June 30, 2022
Take2 is generating less cash in 2021. The quarterly operating cash flow fell from $445.52 million, and the quarterly ending cash flow fell from $2.161 billion on June 30, 2020.
Take2 survived the first pandemic year without borrowing. Take2 reported six straight quarters of negative financing cash flow between March 31, 2020, and June 30, 2021.
However, the total debt rose slightly from $177 million on March 31, 2020, to $188 million on June 30, 2021. Take2 Interactive has a small amount of debt.
The cash and short-term investments grew during the pandemic. Take2 had $2.548 billion in cash and short-term investments on March 31, 2020. That number grew to $3.189 billion on June 30, 2021.
Take2 shows games can generate cash flow, but the cash does not always indicate growth. One reason Take2 is not growing is that it relies heavily on traditional console games, which are sold as standalone products.
Take2 generates cash flow from Massive Multiplayer Online Games (MMOGs) like Blizzard Activision and Tencent Holdings. MMOGs, such as Fortnite and League of Legends, make money because thousands pay to play them daily.
The SocialPoint and Nordeus mobile games could make money from subscriptions, however. Rockstar Games and 2K can build MMOGs of popular games such as Red Dead and Grand Theft Auto.
Today’s market provides many excellent alternatives to Take2 Interactive.
3 Alternative Investments to Rockstar/Take 2 Stock
1. Microsoft Corporation (NASDAQ: MSFT)
Microsoft is one of the world’s largest gaming companies and the world’s biggest and most famous software company. Microsoft is the fourth-largest gaming company globally, with $11.6 billion in gaming revenues.
Microsoft recently purchased Activision Blizzard in a high-profile takeover. This acquisition makes Microsoft the owner of popular game franchises such as Call of Duty, World of Warcraft, and Candy Crush.
The purchase of Activision Blizzard solidifies Microsoft’s position in the gaming industry and further diversifies its revenue streams. It also gives them a competitive advantage over other gaming companies by owning some of the most successful titles in the market.
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The popular Xbox game consoles make Microsoft a major player in gaming. Game Daily estimates that Xbox series sales grew by 16% to 1.35 million in the second quarter of 2021. Xbox was the third best-selling game console after Sony and Nintendo in the second quarter of 2021.
Statista estimates Microsoft sold 48.69 million Xbox One consoles between December 2017 and November 2020. Microsoft sold 85.8 million units of its earlier console, the Xbox 360, Statista estimates. They discontinued the Xbox 360 in 2017.
Download a Free Microsoft Stock Research Report From Stock Rover
Microsoft’s quarterly revenues grew from $38.033 billion on June 30, 2020, to $46.152 billion on June 30, 2021. According to Stock Rover, Microsoft’s revenues grew by 21.35% in the quarter ending June 30, 2021. Microsoft is a pandemic-proof company. It experienced six quarters of double-digit revenue growth between March 31, 2020, and June 30, 2021.
Microsoft is considered a value investment and a growth stock because it generates enormous amounts of cash. According to Stock Rover, the company reported a quarterly operating cash flow of $22.710 billion on June 30, 2021. The quarterly operating cash flow rose from $18.673 billion on June 30, 2020.
The quarterly ending cash flow is smaller, however. Microsoft reported a quarterly ending cash flow of $522 million on June 30, 2021. The quarterly ending cash flow is low because Microsoft has paid off enormous debts. Microsoft reported a quarterly financing flow of -$11.371 billion on June 30, 2021.
Microsoft’s debt level is stable. It reported a total debt of $82.278 billion on June 30, 2021. The total debt grew slightly from $82.11 billion on June 30, 2020.
Microsoft has an enormous amount of cash. It had $130.334 billion in cash and short-term investments on June 30, 2021. The cash and short-term investments fell from $136.527 billion on June 30, 2020.
The value at Microsoft is growing. The total assets grew from $301.311 billion on June 30, 2020, to $333.779 billion on June 30, 2021.
Microsoft is a cash-rich value investment with a high rate of growth. The growth extends to the stock. Microsoft’s stock price grew from $221.40 on October 12, 2020, to $296.20 on October 11, 2021.
2. Sony Group Corp (NYSE: SONY)
Sony is the largest gaming company on Earth, with $25 billion in gaming revenue in 2020. Sony manufactures and markets the world’s most popular next-gen video game console: the PlayStation 5.
Sony trades on the New York Stock Exchange as SONY, although the company is based in Tokyo. Sony’s American deposit slips trade on the NYSE as SNE.
Sony makes enormous amounts of money. It reported a quarterly gross profit of $6.815 billion, a quarterly operating income of $2.548 billion, and quarterly revenues of $20.407 billion on June 30, 2021.
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There is growth at Sony. The company’s revenues grew by 11.68% in the quarter ending on June 30, 2021, 24.76% in the quarter ending on March 31, 2021, and 15.44% in the quarter ending on December 31, 2020.
Sony can generate enormous amounts of cash. It reported a quarterly ending cash flow of $15.599 billion on June 30, 2021. The quarterly ending cash flow grew from $3.248 billion on March 31, 2021, to $13.473 billion on June 30, 2020.
The quarterly operating cash flow fell from $2.698 billion on March 31, 2021, to -$3.9 billion on June 30, 2021. The quarterly operating cash flow fell from $4.675 billion on December 31, 2020, to $4.229 billion on September 30, 2020.
Sony is paying off enormous amounts of debt. It reported quarterly financing cash flows of $4.224 billion in the quarter ending on December 31, 2020, $3.28 billion in the quarter ending on September 30, 2020, and $2.694 billion in the quarter ending on June 30, 2020. The quarterly financing cash flow fell to -$609.82 million on June 30, 2021.
Sony finished the first pandemic year with less cash and more debt. The cash and short-term investments fell from $32.989 billion on June 30, 2020, to $19.134 billion on June 30, 2021. The total debt rose from $18.905 billion on June 30, 2020, to $15.520 billion on June 30, 2021.
Sony has more value. The total assets grew from $219.267 billion on June 30, 2020, to $255.617 billion on June 30, 2021. Sony has growing value.
Sony’s American deposit ships paid a biannual dividend of 23.9₵ dividend on June 12, 2021. Sony will pay another 23.9₵ dividend on December 8, 2021. That dividend will grow to 27.9₵ on June 8, 2022, and December 12, 2021. Stock Rover confirms that Sony offered a 0.44% forward dividend yield and a 48₵ forward dividend yield on October 12, 2021.
Sony is an excellent alternative to Take2 because it pays dividends and has a lower price. Sony has some value characteristics, including enormous amounts of cash and a growing price.
3. Tencent Holdings ADR (OTCMKTS: TCEHY)
The publicly traded Chinese company Tencent Holdings ADR (OTCMKTS: TCEHY) owns WeChat or Weixin. WeChat is the world’s fifth-largest social media solution. WeChat accounts for 30% of mobile internet use in the People’s Republic of China.
Tencent Holdings Limited, the Chinese multinational conglomerate, has been active in the news, with several recent developments affecting its business.
Tencent has seen positive developments in gaming with China’s approval of new games, a key area for the company’s revenue. The Chinese regulators granted publishing licenses to 44 foreign games, including titles from Tencent, signaling an easing of the freeze on game approvals that had impacted the industry.
Furthermore, Tencent is diversifying its business model and exploring new revenue streams. The company’s cloud services division slashed prices by up to 40% in an intense price war, aiming to capture a larger market share in China’s competitive cloud computing industry.
These moves reflect Tencent’s strategic adjustments to navigate regulatory pressures, focus on profitability, and leverage growth opportunities in its diverse portfolio of businesses. Investors and industry analysts closely watch the company’s actions as indicators of broader trends in the Chinese tech sector.
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Take2 Games (Rockstar Stock)
Take2 Games has one of the most impressive game catalogs in the industry. Take2 Interactive is the eighth-largest gaming company in the world by revenue.
Take2 sold over 60 million copies of its Red Dead Redemption and 8 million copies of Red Dead Redemption 2 between October 2018 and August 2021—Take2’s 2k subsidiary claims to have sold 112 million units of its NBA 2K game.
2K publishes high-profile games, including Marvel’s Midnight Suns, which stars the Marvel Superheroes. 2K partners with Disney (DIS) subsidiary Marvel Entertainment to make superhero games.
2K also develops games for the National Basketball Association (NBA) and World Wrestling Entertainment (WWE). NBA 2K21 was Take2’s most profitable game in 2020.
2K works with several respected game studios to develop games, including Visual Concepts, Firaxis Games, Hangar 13, Cat Daddy Games, 31st Union, and Cloud Chamber. Other 2K titles include Bioshock, Borderlands, Mafia, Sid Meier’s Civilization, and XCOM.
Take2 subsidiaries include mobile games publisher Socialpoint. Socialpoint’s library includes Dragon City, Monster Legends, and Tasty Town. On October 10, 2021, Socialpoint claimed its games had two million unique daily users, and players have downloaded its games over 600 million times.
Another Take2 company is Private Division. Private Division publishes several popular titles, including Kerbal Space Program, Ancestors: The Humankind Odyssey, The Outer Worlds, Hades, and Disintegration. Private Division owns several game developers, including Moon Studios, Roll7, Panache Digital Games, and Squad.
Nordeus is a Take2 subsidiary in Belgrade, Serbia. Nordeus publishes mobile games that include the fantasy football (soccer) mobile game Top Eleven, the strategy game Heroic, and another football game they call Golden Boot.
Rockstar & Grand Theft Auto VI
Recently, Rockstar Games, a subsidiary of Take-Two Interactive, made headlines by announcing the upcoming release of Grand Theft Auto VI, slated for launch in 2025. The announcement came after an accidental trailer leak, but it excited gamers and investors.
See the Rockstar Games (TTWO) Chart Live on TradingView
This announcement is significant as the Grand Theft Auto series is one of the most successful video game franchises in history, and a new installment is highly anticipated by fans and investors alike.
The reveal of Grand Theft Auto VI has substantial implications for Take-Two Interactive. From a financial perspective, new entries in major franchises typically drive large revenue streams for video game publishers, given their high sales potential. A new Grand Theft Auto game could significantly boost Take-Two’s earnings upon release and subsequent quarters through game sales and potentially through recurrent consumer spending in online modes.
However, the announcement indicated a longer timeline before the game’s release, which may have disappointed some fans and investors expecting an earlier launch date. This could mean that any significant financial impact from the game’s sales would not materialize until the fiscal year coinciding with and following the 2025 release.
The timing of the release may also be strategic, allowing for further development to ensure the game meets the high expectations set by its predecessors and to potentially align with new hardware cycles, as new console generations typically offer improved performance that can enhance the gaming experience.
Furthermore, the early announcement and subsequent marketing efforts, such as the release of the game’s first trailer, help build anticipation and create a sustained buzz leading up to the launch. This long lead time can also benefit Take-Two’s planning and financial forecasting.
For Take-Two Interactive, the announcement of Grand Theft Auto VI is a reaffirmation of its strong position in the gaming industry, leveraging its flagship franchise to potentially drive future growth. It also underscores the company’s commitment to its marquee titles and its strategy of investing in high-quality content with a proven track record of commercial success. While the immediate financial impact may be limited due to the distant release date, the long-term prospects look promising for Rockstar Games and its parent company, Take-Two Interactive.
Should You Invest in Rockstar/Take 2 Interactive?
Take2 will need to invest heavily in MMOGs and other subscription games if the company is to grow and survive. Subscription-based multiplayer platforms are the future of gaming.
Despite that, Take2’s value is growing. The total assets grew from $5.369 billion on June 30, 2020, to $6.314 billion on June 30, 2021. The problem is that the growth is not generating more revenue at Take2.
Take2 stock might be a poor investment because it pays no dividends, and the stock price has underperformed the S&P 500 by 29% in 2021, according to Stock Rover. Investors who want to make money need to seek alternatives to Take2.
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Summary
The market offers excellent alternatives to Take2 Interactive for those who want value game investments. I do not consider Take2 a value investment in gaming, but I think Sony, Microsoft, and Activision Blizzard are good investments in gaming.
