With Grand Theft Auto VI launching in less than a month, demand for Sony's PlayStation 5 consoles in the US has already surged.
Bloomberg cites new data from market research firm Circana showing a 22% jump in PS5 sales, while tightening availability of the premium PS5 Pro suggests consumers are rushing to upgrade ahead of the Nov. 19 release.
GTA VI will launch only on PS5 and Microsoft's Xbox gaming consoles, with a PC release expected late in the year.
Circana also found that hardware revenue surged 43%, supported by higher prices for the PS5, which now costs $900 for the premium version.
The report said the $900 premium console has sold out or is in limited supply at major retailers worldwide, including Amazon and Best Buy. Price increases have largely been driven by the memory chip shortage.
Not surprising.
Raymond James interactive entertainment analyst Andrew Marok wrote in an earlier note that "the launch of Grand Theft Auto VI is set to be transformational” for Take-Two Interactive, whose wholly owned subsidiary, Rockstar Games, developed the game.
Marok wrote:
Thesis
"We reiterate our Strong Buy rating. The launch of Grand Theft Auto VI is set to be transformational to the company's trajectory, providing a structurally higher level of bookings and EPS following its release and the subsequent post-launch monetization. Even optimistic estimates underrate the potential of the scale of GTA VI's launch in our view, and we remain positive on the name through its release."
The Setup
"Expectations for GTA VI are high, but the company's guide and lack of disclosure around GTA Online is leading some investors to take a more cautious approach. We appreciate management's conservatism on strong GTA VI pre-orders, noting that they can be canceled at any time. Still, at the time of this quarter's report it will be 10 days from launch, minimizing that likelihood in our view and potentially leading to a more optimistic outlook."
TTWO shares have fallen 22% from their July peak of $258 and have traded sideways around $200 since late September.
All 32 analysts tracked by Bloomberg have a "Buy" rating on the stock, with a 12-month price target of $295.