Take-Two Interactive (TTWO, Financial), like other gaming stocks, has been in an uptrend this year thanks to several factors. The company’s future prospects look bright, and investors can expect it to continue performing well going forward.
Digital sales
Throughout the past five years, Take Two Interactive has gained more than 240%, but it still has enough room to grow. As a matter of fact, the video game industry is growing at a strong rate, and the company’s robust line-up of licensed and original properties places it in a position to gain advantage from the momentum.
Nowadays, the gaming publishers are moving toward digital sales as it allows them to generate more profits by eliminating the retailer's cut. Publishers are increasingly encouraging gamers to buy games digitally by offering various offers and discounts.
On top of that, gamers too are increasingly purchasing their games digitally and spending more on in-game purchases. This clearly suggests that Take-Two is well poised to carry on rising at a healthy rate. In the most recent quarter, the company’s recurrent digital consumer spending surged approximately 18% year over year and accounted for 31% of net revenue.
The company’s lineup of robust properties, together with valuable trends in the industry, appears to be a long-term winner in the gaming industry.
Future growth plans
As technology is advancing at a rapid rate, people are becoming progressively interconnected. In the gaming industry, Take-Two is aware of the influence of live streaming and seeks to satisfy to the interests of consumers.
Two years before, the company proved its idealistic approach to gaming, publicizing that it received $22 million after cashing out its outlay in Twitch, which has now turned into the foremost social video community for gamers around the globe.
Keeping in mind that the Twitch community comprises 9.7 million daily active users (DAUs); there is noticeably an extensive appeal with shared gaming experiences, as the company primarily focus on connecting with users and carries on streaming live events on the Twitch platform.
Moreover, the company is aggressively pursuing opportunities for growth in Asia and Africa as well as Latin America. Among them, China is of particular interest, as China was responsible for bringing approximately $25 billion in revenue of the worldwide games market this year. Therefore, the company believes a lot of revenue could be produced from China by appealing to Chinese customers.
Final words
Due to the two positive trends mentioned above, Take-Two still has a lot of room to run. The stock has been a great performer over the years, and I expect it to continue rising.
Disclosure: No position.
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