Wall Street Breakfast

Buckle up for the year of Grand Theft Auto

GTA VI predicted to generate $3 billion in revenue. (0:15) Madison Square Garden called a best idea for '25. (2:39) Get Apple TV for free. (3:48)

Show Notes
Stock markets will close Jan. 9 for President Carter Day of Mourning
What to watch out for in 2025 (including a rate hike)

Find out more about Seeking Alpha's Virtual Analyst Reports here.

Duration:: 6m
Broadcast on:: 30 Dec 2024
Audio Format:: other

Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action news and analysis. Good afternoon, today's Monday, December 30th, and I'm your host, Kim Khan, our top story so far. The video game sector could be dominated next year by the release of Grand Theft Auto 6 by Take 2 Interactive and Rockstar Games. Consumer interest is reported to be sky high for the latest GTA, which is expected to be released in the fall of 2025. Analysts predict GTA 6 could sell 38 million copies in its first 12 months. At a price point of $69.99 per copy, that would generate about $2.7 billion in sales. Including potential online mode revenues, GTA 6's total first-year revenue could easily approach $3 billion. But CEO Strauss Selenik told the FT, "I never claimed victory before it occurs." Grand Theft Auto 6, which Take 2 Interactive plans to release on Sony's PlayStation and Microsoft's Xbox consoles, is forecast to top $1 million in pre-orders before it even becomes available. Across the video game industry, many publishers are hesitant to commit to fall 2025 release dates for their own games, fearing competition with GTA 6. While Rockstar and Take 2 have officially announced a fall 2025 release window for GTA 6, there is speculation about a potential delay. Some industry analysts believe Rockstar may push the release into 2026, given their history of delays and the massive scale of the project. On Wall Street, Bank of America analyst Omar Desuki thinks a positive development for Take 2 investors and GTA 6 fans would be more information about the mega title via full trailer, and potentially more marketing communication about the game. Take 2 Interactive has averaged a 30% gain in the year ahead of a GTA release, shares were up about 20% since the start of September. In today's trading, hopes that the last two days of the traditional Santa rally could bring some cheer to bulls or fading, the move is decidedly risk off to kick off the week with equities down and bonds up. The major stock averages are down about 1%, but off their lows earlier, and the 10-year treasury yield is back below 4.6%. Also in trading news, stock markets announce that they will be closed on Thursday, January 9 for the National Day of Morning for President Jimmy Carter. On the economic front, December's Chicago PMI fell unexpectedly to 36.9 for 40.2, the forecast was for a rise to 42.7. In November, pending home sales rose 2.2% month on month, topping the 0.9% consensus, and accelerating from 1.8% growth in October, revised from 2%. Among active stocks today, Guggenheim called Madison Square Garden Entertainment a best idea for 2025. Analyst Curry Baker said the company, which owns venues such as Madison Square Garden and Radio City Musical, should be able to generate close to double-digit growth in its adjusted operating income despite a number of one-time headwinds. Baker has a buy rating and a $48 price target on the stock, implying some 40% upside from current levels. Nvidia said it has closed its acquisition of Israeli startup Run AI. Nvidia announced in April its deal to acquire Run AI, which makes AI chips more efficient and can reduce the number of GPUs needed to complete tasks. Terms of the deal were never disclosed, but previous media reports stated that Nvidia paid roughly $700 million. And Huawei Technologies has reduced the prices of several high-end devices, including smartphones, by up to 3,000 yuan, or $411, over the weekend on a Chinese e-commerce platform. That's according to Reuters, which cited a post on the company's Weibo social media account. In a JD.com super-brand day promotion that began from Saturday evening and ran until midnight on Sunday, Huawei offered discounts on its mobile phones, headphones, watches, and tablets. In other news of note, Apple said its Apple TV streaming service will be free over the coming weekend. Apple TV is part of the company's services division, which reached a new all-time high in the fiscal fourth quarter and in September. The services unit's revenue jumped by about 11.9% year over year to $24.97 billion in Q4, but it was below the $25.27 billion analysts were expecting. The services unit also includes the App Store, Apple Music, Apple Pay, iCloud, and Apple TV+. And in the Wall Street Research Corner, influential strategist Torsten Slock has the odds for global market risks in 2025. Slock, the chief economist at Apollo, which has more than $500 billion in assets under management, gives us a top 12 list for next year. Number one is Terrace coming with a 90% chance of that happening. That's followed by Nvidia earnings disappointing inflated expectations, also a 90% chance. Then there's the US economy re-accelerating and animal spirits coming back with an 85% chance, followed by M&A activity and IPO activity rebounding, 75% chance there. Number five is the Fed stops talking about R* 70% chance. That's followed by US inflation accelerating in Q1, driven by a strong economy, tariffs, restrictions on immigration, and seasonal factors. He puts a 40% chance on that. Here's the one that's most interesting, in my opinion, the Fed actually raises rates in 2025. He also has a 40% chance of that happening. Number eight is 10-year yields moving above 5% before mid-year, 40% chance of that happening, and the same chance of a recession in Germany. Number 10, China goes into outright recession in 2025, 33% chance, a 10% chance of a fiscal crisis in the US, and finally the probability of a recession in the US 0%. And early wishes for a fun, happy, and healthy New Year's Eve. There will be no Wall Street lunch on December 31st, but we will have a special 2024 recap podcast on New Year's Day. Re-imagine the way you invest with Seeking Alpha's virtual analyst reports, an AI-powered tool that consolidates and synthesizes crowdsourced analysis and quant ratings from the Seeking Alpha platform. Find our virtual analyst reports at the top of any stock symbol page with a quant rating. It's where AI meets human ingenuity and you get the best of both worlds with just one simple click. [BLANK_AUDIO]