Sea Limited vs. Take-Two Interactive: Which Gaming Stock has an Edge?

Globe and Mail

14 hours ago

Sea Limited SE and Take-Two Interactive TTWO are well-known video game providers. While SE's Garena Free Fire is hugely popular, TTWO rides on franchises including Grand Theft Auto (GTA) and Red Dead Redemption. Both stocks have been benefiting from rising consumer spending on mobile games, which, per SensorTower, reached approximately $6.85 billion in May, reflecting a 5.4% increase on a monthly basis.
Per Statista, video game revenues are expected to see a CAGR of 7.01% between 2025 and 2030, hitting $733.22 billion, with mobile game revenues witnessing a CAGR of 5.4% to hit $163.98 billion by 2030. This offers major growth opportunities for both Sea Limited and Take-Two Interactive.
So, SE or TTWO, which of these gaming stocks has the greater upside potential? Let's find out.
The Case for SE Stock
Sea Limited is riding on strong Garena (Digital Entertainment) revenues, which increased 8.2% year over year to $495.6 million in the first quarter of 2025. Bookings soared 51.4% year over year to $775.4 million, driven by the success of SE's flagship game, Free Fire. According to SensorTower, Garena Free Fire was the second most downloaded mobile game globally in May 2025, driven by the game's growing popularity in markets like India, Brazil and Indonesia.
Garena's collaboration with Naruto Shippuden contributed to increased user engagement. While quarterly active users increased 11.3% year over year to 661.8 million, quarterly paying users were 64.6 million, up 32.2% year over year. Paying user ratio was 9.8% compared with 8.2% for the first quarter of 2024.
Expanding gaming portfolio benefits Garena. In April, Sea published Delta Force Mobile, a first-person tactical shooting game, across markets in Southeast Asia, MENA, and Latin America that attracted more than 10 million downloads. The launch of Free City is also noteworthy. The company remains on track to achieve double-digit growth for Garena's user base and bookings in 2025.
The Case for TTWO Stock
In fourth-quarter fiscal 2025, Take-Two Interactive's NBA 2K25 posted a near-record performance and exceeded the company's forecast. To date, the title has sold nearly 10 million units, a 7% increase compared to NBA 2K24 during the same timeframe. The Grand Theft Auto series exceeded the company's expectations, and at the end of the fiscal fourth quarter, GTA V had sold in more than 215 million units. Red Dead Redemption 2 also outperformed, with net bookings growing 23% year over year.
However, Take-Two Interactive's reliance on a few franchises is a headwind. The much-anticipated Grand Theft Auto VI, originally expected to drive fiscal 2026 performance, has been pushed to May 26, 2026, falling into fiscal 2027. This delay represents a critical blow to near-term revenue expectations and highlights the company's inability to maintain consistent release schedules. TTWO's fiscal 2026 guidance of $5.9-$6 billion in net bookings represents a modest 5% growth.
Take-Two Interactive's decelerating growth trajectory, combined with increasing cost pressures, makes the stock risky for investors. The company's guidance indicates that recurrent consumer spending will remain flat in fiscal 2026. Mobile revenues are expected to decline, along with Grand Theft Auto Online 's performance. Operating expenses have surged, with TTWO reporting a 3% year-over-year increase in fiscal 2026 expectations, primarily driven by higher marketing costs. TTWO's development costs continue escalating, with capital expenditures of approximately $140 million planned for fiscal 2026.
Price Performance and Valuation of SE and TTWO
In the year-to-date period, Sea Limited shares have surged 46.8%, outperforming Take-Two Interactive, which has appreciated 31.2%.
Stock Performance: SE vs. TTWO
Valuation-wise, both SE and TTWO shares are currently overvalued, as suggested by a Value Score of D and F, respectively.
Valuation: SE vs. TTWO
In terms of forward 12-month Price/Sales, Sea Limited shares are trading at 3.78X, lower than Take-Two Interactive's 6.22X.
How Do Earnings Estimates Compare for SE and TTWO?
The Zacks Consensus Estimate for Sea Limited's 2025 earnings is pegged at $2.68 per share, unchanged over the past 30 days. This indicates a 41.8% increase year over year.
The consensus mark for Take-Two Interactive's fiscal 2026 earnings is pegged at $2.93 per share, which has declined 10.4% over the past 30 days. The figure indicates a whopping 42.93% jump year over year.
SE Edges Past TTWO on Diversified Business Model
Although Take-Two Interactive boasts of a greater number of well-known gaming franchises, Sea Limited rides on Free Fire's popularity, as well as growing Shopee (e-commerce) and Monee (fintech) businesses. Shopee's growing footprint in Asia and Brazil, as well as Monee's expansion into Brazil, one of South America's most underserved credit markets, signals a strategic pivot toward sustainable growth.
Sea Limited currently carries a Zacks Rank #3 (Hold), which makes it a stronger pick compared with Take-Two Interactive, which has a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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