Gaming: Take-Two reports mixed earnings, stock jumps

Yahoo Finance Live anchors discuss the earnings report from Take-Two Interactive and the outlook for gaming trends.

Video transcript

- Also, let's talk about Take-Two. It takes two to make a thing go right. Those earnings have lifted the stock, as CEO Strauss Zelnick says that while video games have dipped below their pandemic highs, gamers are still playing more than they were before the COVID era. Shares are up here on the day by about 9% here. It looks like about $10 early in trading here, as of right now.

And I think the gaming environment, too, we're looking for some of that continued strength. The titles that Take-Two has, of course, the NBA 2K looking to get some of those in-game competitions coming back, too. I was actually at one of those back in, I believe, 2018, 2019. And there's so much fanfare that actually is driven around these in-person gaming events, especially because they have those partnerships with major leagues, like the NBA, too.

And so we'll see when that comes back and what type of fanfare that continues to drive going forward from here.

- Yeah I'm surprised by the strength this quarter out of Take-Two. Especially, you look at the NPD video game sales data that came out a couple of days ago, sales in the first quarter down 1%. You know, it was also interesting to hear on the conference call big buff Strauss Zelnick, the CEO of Take-Two Interactive. He did note and I think it's a little flippant, I think he actually has to acknowledge what is going on in the real world here, he notes monetary changes in the market value-- in the market are kind of irrelevant to us, trying to, I think, quiet concerns on why his stock is down about close to 40% year to date.

But still, I would have liked to see him acknowledge that there is this world out there, and his stock has been hammered, along with the rest of the market.

- Yeah, it's a fair point. I mean, it's also interesting to see that even though the forecasts here are not fantastic from Take-Two, the stock is doing quite well. For the year, Take-Two is projecting revenue, adjusted revenue, of as much as $3.85 billion. The estimate was for $4.08 billion. And adjusted earnings per share forecast is below estimates, as well, but it looks like that people are sort of shrugging that off.

Remember, they're in the process of buying Zynga, too, so that was not yet reflected in these numbers. But obviously, they will be reflected in the numbers going forward. I mean, just by what you're saying about ZelnicK'S comments, I mean, I do wonder if you are spending on video games, is that one of the last things that you are willing to give up if you're cutting other spending. I don't, I don't know, but if that's your primary recreation, maybe it is.

- Another note I'll throw out here from the conference call, they did note weakness in mobile spending, which you don't really want to hear when you're spending over $12 billion to buy Zynga. That's not exactly a good positive call out, I would say, for Take-Two.

- Well yeah, and it comes back to the titles that they're creating at the end of the day. Where can they continue to publish titles that are going to be able to be consumed across devices and not just on consoles. Because of course, the console backlog, that's created some virality and some demand for people who want to get the newest PS5 consoles, or the newest Xbox consoles. But what it's going to come down to in any type of recessionary period, if you're cutting back on spending, how much can you continue to engage with the game play on the devices that you already have?

- You just reminded me. I need to download Oregon Trail for my phone. That's one of my favorite games that I played. I think it was on the Commodore when I was elementary school. You have to avoid that dysentery.

- And is it, is it--

- Dysentery, dysentery?

- Dysentery, yes, it is. In real life and online, you definitely want to avoid dysentery.

- Didn't want to die, got to shoot that ox. I mean, that's just how it is. Shoot the ox, stay alive.

- Avid gamer on our team, Colin Foley, does confirm that you cut the gaming spending. You trade down in your deli meats and everything else, and then the last thing you cut is the gaming spending.

- Well, it looks like nobody's trading down on deli meats. I just went to walmart.com, and those giant tubes of salami, they're completely out of stock.

- I make a mean grilled cheese.

- So despite what they said on the call, I don't know.