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Take-Two Interactive Is Most Likely Insulated From Fortnite

Edgar Torres H profile picture
Edgar Torres H


  • I provide an analysis of the recent gaming sector sell-off.
  • Electronic Arts' earning's call insights on Fortnite.
  • The potential impact of Fortnite on Take-Two's results, in particular RDR2.
  • I estimate RDR2's number of copies sold for its first year.
  • I perform a valuation for Take-Two, taking into account all the previously mentioned factors.

The gaming sector recently sold off. This event caused investors to suffer without an apparent cause. I believe that Electronic Arts' (NASDAQ: EA) earnings call might have spooked the market because it showed that Fortnite might have a negative impact on the revenues of gaming stocks.

However, I think the reaction was overdone. Particularly in the case of Take-Two Interactive (NASDAQ: NASDAQ:TTWO), because it should be insulated from Fortnite. After all, Red Dead Redemption 2 isn't competing for gamers with Fortnite. Therefore, I'll attempt to provide a reasonable estimate for RDR2 sales, and with it, a valuation for TTWO.

(Source: EA and TTWO logos)


As you've probably have heard by now, Fortnite is a phenomenon that's revolutionizing the gaming market. The game proved that a completely free-to-play model could produce millions of dollars in profits for the developer.

Fortnite has popularized the "Battle Royale" game mode. This genre typically consists of a third-person shooter with a free-for-all element. In Fortnite's case, 100 players are thrown in a huge environment and battle each other until only one is left standing and wins. It sounds like a fun concept, and it's relatively new. It's similar to the movie The Hunger Games, but in a video game format and without any lore or background story.

In the figure above, you can see how immensely popular Fortnite is. You probably have seen it for yourself by now. Fortnite gamers are everywhere. Search volume shows that Fortnite has dwarfed Call of Duty, Battlefield, and Overwatch. This trend indicates that big gaming companies shouldn't underestimate the free-to-play Battle Royale genre.

On a conference call with analysts, EA executives maintained their view that "Fortnite" is expanding the gaming market, especially among young people, casual gamers, and women.

Source: IBD

The prevailing narrative is that Fortnite has

This article was written by

Edgar Torres H profile picture
Follow me for analyses of undercovered/overlooked stocks. My takes are based on numbers but without completely ignoring the underlying story. I'm not uncomfortable holding unpopular opinions, nor do I seek them. I just want to get as close to the truth as possible.I've been an Investor for over nine years. I write to structure my thoughts. I worked on my country's stock exchange as an analyst for private debt prospectus. I worked as a sell-side analyst and also as a broker. I love the markets and everything related, and now I’m able to be a full-time investor. I'm very grateful for this. I hope my comments/articles are of use to someone else. - "Veritas Super Omnia."

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I'll be watching TTWO's next ER closely for insights on Fortnite and RDR2. No position until then.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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