Shares of Take-Two Interactive (NASDAQ:TTWO) shed more than 4% during extended trading on Monday after the key sales metric for the video game company's third-quarter came in short of analyst expectations.

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Take-Two's reported revenues of $866 million for the quarter, as well as its outlook for the current quarter, were below what Wall Street analysts expected. However, Non-GAAP earnings beat analysts' estimate of $1.12 to $1.32. The company projects net booking for the fiscal fourth quarter that ends in March to range between $3.37 billion and $3.42 billion.

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Take-two expects adjusted EPS of 83 cents on net bookings of $833 million, missing consensus EPS estimates of $1.15, which amounts to $925 million.

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The year-over-year growth in quarterly net bookings was primarily driven by a 3.2% yearly increase in console net bookings, comprising 72% of the total net bookings during the quarter.

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FINANCIAL OUTLOOK

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Earlier this year, the company kicked off a wave of videogame consolidation when it announced a deal to buy mobile game firm Zynga (ZNGA).  

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According to company CEO Strauss Zelnick, once the deal closes in the first quarter of fiscal 2023, about half of its net bookings will come from mobile. He said, "Fiscal 2022 is shaping up to be another strong year for Take-Two, and we are once again raising our Net Bookings guidance for the year."

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STOCK RATING

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Following Robert W. Baird and Ascendiant giving Take-Two a Buy rating last month, the company received its third Buy from Wells Fargo.

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Analyst consensus around the stock is a Strong Buy based on 11 Buys, and 3 Holds. The average price target for Take-Two of $204.79 implies an upside potential of 17.0% from current levels.

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Shares have declined 17.9% over the past year.

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ABOUT TAKE-TWO

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Take-Two Interactive Software Inc develops and publishes products through its labels, Rockstar Games, 2K, Private Division, Social Point, and Playdots. Its products are designed for console gaming systems, including Sony's PlayStation, Microsoft's Xbox, and Nintendo's Switch, alongside many others.

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