Why Grand Theft Auto 6 is NOT a Good Investment
Originally published on Linkedin on 8th November 2023
Today's announcement of Grand Theft Auto 6 undoubtedly sent shockwaves across the gaming community, causing a surge in the share price of Rockstar Games' parent company, Take-Two Interactive Software, Inc.
In the world of gaming, few titles command as much attention and adoration as the Grand Theft Auto series. The franchise has drawn in hundreds of millions of fans making it a prominent force in the gaming world.
It's tempting to think that such widespread popularity could translate into a lucrative investment opportunity, but a closer look reveals a different story.
Grand Theft Auto 5, the previous installment, stands as the second best-selling video game ever recorded, a testament to the franchise's immense appeal. However, the success of the occasional title does not necessarily translate into a consistently profitable business. Take Two's financial track record paints a sobering picture.
Take Two has experienced profits in only 12 out of the last 20 years, with a staggering 8 of those years ending in losses. Even during the peak year of Grand Theft Auto 5's release in 2013, where annual net profit reached an impressive +$362 million, the preceding two years were marked by losses of -$104 million and -$26 million. The rollercoaster ride continued in the financial year ending March 2015, a mere year after the record profits, when Take Two recorded a staggering loss of -$279 million.
This lack of consistency in Take Two Interactive's operations raises serious concerns for potential investors. Investing in a company that oscillates between massive profits and significant losses can be akin to gambling. While some individuals might find success trading the company's shares in the short term, long-term investment demands stability and predictability—qualities sorely lacking in Take Two's financial performance.
The allure of Grand Theft Auto's popularity might blind some to the financial realities of its parent company. As tempting as it may be to ride the waves of hype and excitement surrounding Grand Theft Auto 6, investing in Take Two Interactive poses substantial risks. In the ever-changing landscape of the market, prudence and a keen eye on consistent performers are the keys to successful long-term investment. Grand Theft Auto may be a thrilling virtual world, but when it comes to your financial portfolio, a steadier ride is the wiser choice.