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Post: The Ratings Game: Take-Two’s ‘Grand Theft Auto VI’ hack: Severity depends on whether source code was taken, analysts say

Take-Two Interactive Inc. bounced back from earlier weakness Monday after most analysts dismissed significant fallout from a weekend hack of files of the publisher’s next installment of its flagship “Grand Theft Auto” franchise, but the question of whether the hacker really has source code from the game leaves the true impact of the hack up in the air.

Several outlets reported late Sunday that a hacker stole dozens of files related to Take-Two’s

“Grand Theft Auto VI” and posted them online under the handle “teapotuberhacker,” after reportedly getting in through a Rockstar Games employee’s Slack account. The hacker claimed they could possibly leak “source code and assets” soon. At last check, the post has since been locked on the forum but not taken down.

After shaking off premarket activity showing the stock down as much as 6%, shares of Take-Two were in-line with the broader market Monday, closing up 0.7% at $125.08, compared with a 0.3% rise in the iShares Expanded Tech-Software Sector ETF
and a 0.7% rise in the S&P 500 index

Back in February, Rockstar confirmed it was working on the next installment of GTA, what would ostensibly be called “Grand Theft Auto VI.” The leaked footage pretty much confirms reports that the new iteration will have a woman as a playable lead protagonist in a Miami-like, i.e. Vice City-like, setting.

In a statement Monday, Rockstar Games confirmed an “unauthorized third party illegally accessed and downloaded confidential information from our systems, including early development footage for the next Grand Theft Auto.”

“At this time, we do not anticipate any disruption to our live game services nor any long-term effect on the development of our ongoing projects,” the studio said. “We are extremely disappointed to have any details of our next game shared with you this way. Our work on the next Grand Theft Auto game will continue as planned and we remain as committed as ever to delivering an experience to you, our players, that truly exceeds your expectations.”

The real question that analysts have is: Does the hacker, as claimed, really have source code for the game?

Even though, the hack is a “PR disaster, possibly sets back production, and hurts morale,” Jefferies analyst Andrew Uerkwitz, who has a buy rating, said the released clips show “the game is further along than many believe and won’t impact game reception/sales.”

“The biggest unknown is if the hacker actually has GTA V and GTA VI source code, how much of it they have, and if it gets out into the world, which thankfully doesn’t appear to have happened yet, Uerkwitz said. “If the source code leaks, it could necessitate significant changes under the hood of the game to ensure its stability, and the server integrity of GTA VI Online once it launches.”

“Footage does not change our thesis on a FY25 GTA 6 release, though compromised data makes a later release versus expectations more likely,” said Raymond James analyst Andrew Marok, who has a market perform rating on the stock. “Most of the leaked videos are short (approximately 90 videos covering about 50 minutes of play time), offering little in the way of substantive gameplay.”

“If anything, the potential compromising of the GTA 6 source code (as yet unconfirmed) would be likely to delay planned release timelines, creating significant amounts of extra work to undo the damage the hacker has caused,” Marok said.

Oppenheimer analyst Martin Yang, who has an outperform rating on the stock, said that hacks are not uncommon in the industry and that “even the worst hack isn’t that bad,” referring to a 2011 hack of Sony Corp.

that put the PlayStation Network offline for 23 days.

“We believe the leaks will have a negative impact on Rockstar’s near-term operations such as audits and investments in cybersecurity, legal actions against the hacker and websites that share the footage, and potential changes in GTA 6’s marketing plan,” Yang said. “However, based on other reported hacks at game publishers and platforms, the damage to Take-Two and the GTA franchise is mostly likely insignificant.”

“The leak can be disruptive to game development as Rockstar may need to review its IT infrastructure and implement enhanced cybersecurity protocols,” Yang said. “Given heighten anticipation for GTA 6 and how widely the leaked footage has spread over the weekend, Rockstar may also make changes to the marketing and promotion plans for GTA 6.”

While source code in the wild, “might necessitate some reprogramming to prevent exploits of the finished game,” the hack doesn’t seem as bad as some others and may actually have a positive effect, said Bernstein analyst Matti Littunen, who has an outperform rating.

“Drawing an analogy with the notorious leak of [Valve’s] ‘Half Life 2,’ which was followed by that game being delayed by a year, would not make much sense to us,” Littunen said.

“The ‘Half Life 2’ leak showed a clearly unfinished game just days before the planned release date, leading to a fan backlash,” Littunen said. “In contrast, the audience reaction to the GTA reports seems relatively positive, with the fans just glad to have more evidence that the game they have been waiting for so long is taking shape.”

Naturally, the incident sparked reactions online, most of the tongue and cheek variety:

Of the 27 analysts who cover Take-Two, 20 have buy-grade ratings and seven have hold ratings, along with an average price target of $164.04. Shares are down 30% for the year, while the IGV ETF is down 33%, and the S&P 500 is down 18%.

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