GTA 6 brings investment opportunities!?

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GTA 6

GTA, or Grand Theft Auto, is a game developed by Rockstar, under its parent company TakeTwo. This game is the highest-grossing and best-selling game in history—bar none. And just yesterday, the company released its second trailer, announcing the official sale will begin on November 19th this year. So, the question is, does TakeTwo have investment value now? More importantly, will you be taking a day off on November 19th?

Yesterday, the first official in-game trailer for GTA 6 was released. How many people watched it? So many that the streaming platform crashed. And this time, the trailer wasn’t dropped first on Twitch, YouTube, or X, but on Netflix. Although some users couldn’t access it, the fact that it played on Netflix speaks to the special position of the GTA franchise.

Christopher Dring, co-founder of The Game Business, said on CNBC today: "I've never seen Netflix showcase a game like this, which shows GTA 6 is in a different league. He also mentioned that the previous instalment, GTA 5, has been out for 13 years now, yet it remains one of the top five best-selling games annually. I also wonder—who hasn't bought GTA 5 yet?"

Before the trailer was revealed, parts of the game had already been leaked, which the company described as "heartbreaking." But Dring believes the enthusiasm after yesterday's gameplay debut shows that leaks have not affected the launch this time.

So, how do institutions view the outlook and performance?

Analytics firm Newzoo estimates that global pre-sales have already reached around $260 million. If this momentum continues, sales could reach $4.5 billion in the first release week. But the market’s current revenue forecast for the fourth quarter is only $3.35 billion, meaning that a single game could boost total company revenue above expectations by 35%.

Both Morgan Stanley and J.P. Morgan released reports on Friday expressing bullishness on TakeTwo. The reason: ahead of this highly-anticipated launch, interest in the company is surging among both institutions and retail investors.

However, Wells Fargo remains somewhat cautious. They said that TakeTwo still needs a re-rating, which will require another multiplayer title, as well as positive news about the new version of GTA Online. This trailer alone only led them to slightly raise their sales forecast.

Differing views on sales forecasts are normal, but there’s another debate that’s a bit harder to explain.

Prior to the trailer, GTA 6 announced it would be released only as a digital download, with no physical disc version. The self-proclaimed source of the leak claimed it was a form of protest—against Rockstar’s decision not to issue discs, and Sony’s reported plan to discontinue disc support in 2028.

Chief Executive Officer Strauss Zelnick said during the August 7th earnings call that discs no longer make sense to consumers, given that over 90% of company business is now digital distribution. Data from Circana also shows US physical game disc sales have fallen to an all-time low. So while there may be sentimental support for discs, digital distribution has already proven itself in efficiency, cost, and broader demand.

When Jason was studying in New York more than ten years ago, he would line up at GameStop at midnight to buy games. The atmosphere was truly something—store managers and customers cheering and applauding, as if buying a game was like winning a championship.

Now, over a decade later, age has dampened that enthusiasm. Now he just wants to pre-download the game and play as soon as possible. So for him, there’s really no difference between disc and digital, as long as there’s no network or vacation issues.

As for TakeTwo, on the one hand, the company had a delayed launch last year and the stock price took a hit. This year, disruptions from AI also squeezed performance, sending the stock down further. So, its past track record may not look great, but looking ahead, I think its current price may offer some opportunity.

As for Wells Fargo’s concerns about GTA Online launching, I’m not worried at all. I think GTA 6’s Online mode will most likely go live within about six months after launch, and will be built on a completely new framework. It’s hard to imagine that players who spent heavily in the old Online won’t spend again in the new one. So I really doubt whether this Wells Fargo analyst has actually played GTA?

Because of this, today Jason bought TakeTwo shares as well as call options expiring in January next year with a strike price of $300, expecting to close within about a week after launch. The risk: if the company delays again or there’s a significant launch issue, this trade will be a total bust. Unlike long-term investing in quality companies, this is a highly risky trade—one you have to approach like a soldier going into battle with no return, taking time off at the risk of getting skinned alive.

Alright, next are Bloomberg’s Top 5 Tech News:

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