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Stock of the Week: Take-Two

What happens when Grand Theft Auto meets Farmville?

Andrew Willis 14 February, 2022 | 4:58AM
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Andrew Willis: When we heard Take-Two, one of the names behind Grand Theft Auto, was going to take over Zynga,  a.k.a Farmville, we thought: the deal is transformative.

Here you have a smaller third-party video game publisher, with some of the most well-known games we play at home, deciding to grow by going mobile. Senior equity analyst Neil Macker says the deal would lead to fifty percent of sales, or net bookings, of the new company coming from mobile gaming.

This could be great. There’s been widespread adoption of mobile gaming worldwide that’s gotten the focus of giants like Tencent, and now you have two underdogs coming together with the best of both worlds.

Blockbuster titles from Farmville to Words With Friends, and then over to Borderlands and NBA 2K. An array of triple-A titles, and great development teams potentially coming together at a great price.

We are slightly skeptical of mobile versions of Grand Theft Auto, or console-based Words With Friends, but the cost and revenue synergies alone that management expects are in the hundreds of millions. And that’s not even including the new titles that come out of this alliance.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Take-Two Interactive Software Inc108.76 USD2.22Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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