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Hawk’s Nest

Take Two Shares Soar on Results as Options Flow Nails the Move

by | May 29, 2023

Take Two (TTWO) a recent big winner as a name working with relative strength since our featured write-up on 3/10 and the June upside call spreads capturing a major return!

The original write-up on 3/10 was as follows:

Take Two Interactive (TTWO) bullish activity seen consistently since December including 2000 March $119 short-term calls bought on 3/7 and April $115 call buyers on 2/24 and 2/27 most significant with 3475 now in open interest. TTWO also has 3500 June $120/$140 call spreads in OI from trades in January, 2500 January $105 short puts opened 12/14 and 2000 January 2025 $105 short puts. TTWO shares worked higher last week but sold off with the market on 3/9 rejected right at the 200-day moving average, though the $120-$127 zone a large VPOC resistance zone and the 200-week up at $132.50. TTWO’s recent low showed weekly bull RSI divergence with the April 2022 low. Near-term positioning may be anticipating MSFT/ATVI deal approval, which if it happened, some see Sony making a run at TTWO. TTWO is a leading developer, publisher and marketer of interactive entertainment for consumers via Rockstar Games, 2K, Private Division, and T2 Mobile Games. TTWO did a large acquisition of Zynga to start 2022 with a bigger shift to mobile gaming. Grand Theft AutoMax PayneMidnight ClubRed Dead Redemption are key franchises. TTWO has a strong pipeline of games for 2023 and many are awaiting the next GTA release which will likely drive shares higher. TTWO has a market cap of $19.4B and trades 22.2X Earnings, 16X FY24 EBITDA and 4X Sales. TTWO revenues are seen rising 18.8% in 2024 with 47% EPS growth as it enters a potential re-rate higher cycle. Zynga will likely remain an overhang until investors become confident that mobile gaming has bottomed. TTWO should reach record levels of bookings/EPS in the next 2-3 years, given its track record of excellence on new game launches and the presence in the pipeline of proven titles like Bioshock and particularly GTA VI. Analysts have an average target of $130 with short interest at 3.9% of the float. Jefferies out in February at Buy with a $165 target seeing it positioned for strong numbers moving forward. “