The publisher of Red Dead Redemption 2, Take-Two, has faced a setback on the stock market. The stock fell by nearly 14%. As a silver lining, Take-Two is now pointing to Red Dead Online, where more content is expected starting April 2019.
This was the trouble: The publisher behind Red Dead Redemption 2 is Take-Two. They had their earnings call last week on Wednesday afternoon German time. There, they revealed their figures and answered questions from analysts.
One might assume that after the excellent sales figures of RDR2 in 2018, the stock would rise – but the opposite was true.
Red Dead Redemption 2 sold exceptionally well in the Christmas quarter, but the outlook for the current first quarter of 2019 is not as high as Wall Street analysts would have liked.
Take-Two’s profit expectations have been raised, but they’re still at a relatively low level.
This is how the stock market reacted: According to Marketwatch, analyst Evan Wingren (KeyBank Capital Markets) downgraded his recommendation for Take-Two’s stock from $147 to $119.
The reason stated by analyst Wingren was “minimal revenue from Red Dead Online until fiscal year 2020.”
The fiscal year 2020 begins on April 1, 2019.
Take-Two’s stock price fell by almost 14% following the presentation of the figures.
Another analyst, Michael Olson (Piper Jaffray), however, said that this negative assessment was too harsh. He maintained his high price target of $152. The executives of Take-Two have “delivered” and exceeded expectations.
Nonetheless, this resulted in a steep decline in Take-Two’s stock, from which the stock was able to recover somewhat last week, but a loss in value remained.
This is the problem with Red Dead Online: While the single-player game “Red Dead Redemption 2” has indeed sold excellently. However, the title launched without a multiplayer mode.
Red Dead Online was only rolled out in a beta version. However, this seems to still not have taken off. Many features are still missing, and not much has happened with it.
Although gold is already being sold for microtransactions, players do not know what they should even purchase with this gold.
As a result, the revenues from Red Dead Online are still low, and therefore the revenue expectations for the current first quarter of 2019 are down, while Wall Street had huge expectations.
More content for Red Dead Online is expected starting April
This is what Take-Two says now: The CFO of Take-Two states that they expect online content for “Red Dead Redemption 2” to come significantly faster in the second quarter of 2019. Therefore, they also expect profits to rise at that time.
Take-Two’s CEO, Strauss Zelnick, also says they expect stronger new content starting April 2019. They are excited about it and are looking forward to it.
This is the overall situation on the stock market for video game companies: Recently, some major video game companies have faced losses on the stock market.
Besides Take-Two, Electronic Arts has also been penalized. At Activision Blizzard, layoffs are now expected to cushion a stock loss.
According to Venturebeat, the major western video game companies alone lost an incredible sum of 20 billion US dollars in market value in January 2019.
Observers like Venturebeat believe that it is due to the rise of Fortnite. The studio behind Fortnite, Epic, is not publicly traded. Investors find it difficult to participate in the success of the studio. Apparently, many analysts and investors have the impression that the rise of Fortnite comes at the expense of established studios, even if they deny it.
Marketwatch even talks about the “Fortnite effect.”
These are some of the plans to push Red Dead Online forward in 2019:
