Take-Two stock tumbles after BMO turns bearish on ‘Red Dead’ concerns

Shares of Take-Two Interactive Software Inc. TTWO, -4.28% are down more than 5% in Tuesday morning trading after BMO Capital Markets analyst Gerrick Johnson downgraded the stock to underperform from market perform. He also lowered his target price to $80 from $119. Johnson is concerned that while initial sales of "Red Dead Redemption 2" were strong, "buzz around this once highly anticipated game has dissipated markedly." This suggests to Johnson that Take-Two might see a "lapse" in engagement, which could make it hard for the company to "monetize to desired levels." He expects continued pressure on videogame stocks, including Take-Two. The rising popularity of new free-to-play games "could pivot the video game industry away from one that generates steady streams of high margin revenue back to more of the hit-driven model we saw in prior generations." Shares of peer Electronic Arts Inc. EA, +4.28% are up 3% in morning trading after the company announced strong user numbers for its "Apex Legends" title. Activision Blizzard Inc. ATVI, +2.24% reports results this afternoon. Take-Two’s shares have fallen 19% over the past three months, while the S&P 500 SPX, +0.94% has risen 0.3%.

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