Take-Two Interactive Software, Inc. (TTWO) Stock Valuation — DCF Analysis
Electronic Gaming & Multimedia · NASDAQ
Current Price
$211.75
Intrinsic Value
$128
-65.4% margin of safety
COMPETITIVE MOAT
↑Grand Theft Auto Franchise Power
The immense popularity and cultural impact of the Grand Theft Auto series create a powerful brand moat. Its established player base and anticipation for GTA VI drive significant demand and pricing power.
↑Recurring Revenue Potential
GTA VI's launch is expected to unlock substantial recurring revenue streams through in-game purchases and ongoing content. This diversifies income beyond initial game sales, fostering customer loyalty.
↑IP Diversification Strategy
Take-Two's ownership of diverse intellectual properties like NBA 2K and Red Dead Redemption allows for cross-genre appeal and reduces reliance on a single franchise. This broad portfolio strengthens its market position.
INVESTMENT RISKS
↓Development Cost Escalation
The increasing complexity and cost of AAA game development, especially for titles like GTA VI, pose a significant financial risk. Delays or budget overruns can impact profitability.
↓Intense Industry Competition
The electronic gaming market is highly competitive with numerous established players and new entrants. Maintaining market share requires continuous innovation and substantial marketing investment.
↓Memory Supply Chain Constraints
Ongoing memory shortages can disrupt production and increase hardware costs for game development and distribution. This bottleneck could impact the timely release and profitability of new titles.
Base case
TTWO base case valuation
A base case discounted cash flow model for TTWO estimates an intrinsic value of about $128 per share, against a current price of $211.75. The model assumes 20.0% annual free cash flow growth, a 10.0% discount rate, and a 30x exit multiple.
Intrinsic Value
$128
Margin of safety
-65.4%
Expected annual return
-9.6%
Base case assumptions: 20.0% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TTWO valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Take-Two Interactive Software, Inc. respond.
Open DCF Calculator for TTWOCompany Overview
Established in 1993 and headquartered in New York, New York, Take-Two Interactive Software, Inc. is a global leader in the development, publishing, and marketing of interactive entertainment experiences for consumers worldwide. The company's extensive catalog is primarily distributed under its prominent labels: Rockstar Games, 2K, Private Division, and T2 Mobile Games. Rockstar Games is renowned for its action-adventure titles, including iconic franchises like Grand Theft Auto, Red Dead Redemption, Max Payne, and Midnight Club, alongside other fan favorites such as LA Noire, Bully, and Manhunt. The 2K label covers a broad spectrum of genres, offering popular series in shooter (Borderlands), action (BioShock, Mafia), role-playing, strategy (Sid Meier's Civilization, XCOM series), sports, and family/casual categories. This includes highly successful sports simulation games like the NBA 2K basketball series, WWE 2K professional wrestling, and PGA TOUR 2K. Private Division supports titles such as Kerbal Space Program, OlliOlli World, The Outer Worlds, and Ancestors: The Humankind Odyssey. For mobile device users, T2 Mobile Games provides free-to-play options like Dragon City, Monster Legends, Two Dots, and Top Eleven. Take-Two's diverse range of products is designed for major gaming platforms, encompassing current and previous generation consoles (PlayStation 4, PlayStation 5, Xbox One, Nintendo Switch), personal computers, and mobile devices (smartphones and tablets). Consumers can purchase these games through traditional physical retail channels, digital storefronts for download, various online platforms, and cloud streaming services.
Financial Metrics — TTWO Stock Valuation Data
Revenue/Share (TTM)
$35.92
FCF/Share (TTM)
$2.43
ROIC (TTM)
-0.8%
ROE (TTM)
-8.6%
P/FCF
87.3x
EV/EBITDA
34.4x
FCF Yield
1.14%
Debt/Equity
0.84x
Based on trailing twelve-month data, TTWO shows a free cash flow per share of $2.43 and a ROIC of -0.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 87.3x and FCF yield of 1.14% are important context metrics when evaluating TTWO's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of TTWO?
Take-Two Interactive Software, Inc. currently generates $2.43 in free cash flow per share. At the current price of $211.75, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is TTWO undervalued?
TTWO trades at a P/FCF ratio of 87.3x with a free cash flow yield of 1.14%. This elevated P/FCF suggests the market is pricing in significant future growth. However, whether TTWO is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value TTWO stock using DCF?
To perform a DCF valuation on Take-Two Interactive Software, Inc.: (1) Start with the trailing free cash flow per share ($2.43) as the base, (2) project future FCF growth over 5-10 years based on Electronic Gaming & Multimedia industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting TTWO's risk profile — with a debt-to-equity of 0.84x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to TTWO?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Take-Two Interactive Software, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Electronic Gaming & Multimedia trends, then discounting those amounts to today's dollars. TTWO's ROIC of -0.8% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect TTWO stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For TTWO, with a debt-to-equity ratio of 0.84x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 34.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See TTWO PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Communication Services valuationsDCF and P/E value TTWO with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.