Take-Two Interactive Software Inc TTWO
Verdict: Sell. Fair value $198 against a price of $255 on 6 Jan 2026, 22% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Industry tailwinds with growing market.
The case against: Intense competitive pressure could compress margins. In FY2025, Net Income was a massive loss of $-4.48B while Operating Cash Flow was only slightly.... Revenue grew from $3.50B in 2022 to $5.63B in 2025, yet Net Income collapsed from a $0.42B profit....
Main risks
- Severe Unprofitability: Three consecutive years of massive and growing net losses ($-4.48B in 2025), resulting in deeply negative ROE (-209%).
- Poor Capital Allocation & High Debt: A negative 3-year ROIIC of -3.4% suggests recent major investments (likely the Zynga acquisition) have destroyed shareholder value so far. This is coupled with high leverage (Debt/Equity of 1.92, Net Debt/EBITDA > 11x).
- Negative Cash Flow Generation: Annual Free Cash Flow has been negative for three consecutive years, indicating the core business is not self-funding and is burning cash.
- Near-term debt maturity concerns
- In FY2025, Net Income was a massive loss of $-4.48B while Operating Cash Flow was only slightly...
- Intense competitive environment