Take Two Interactive has hit gold, now selling through somewhere around 2.5 million copies of Red Dead Redemption in the United States in it's first six weeks, according to newly released sales figures from a leading market researcher.  International sales charts suggest the title is doing just as well overseas with still another month remaining in the company's third quarter. The implication is around 6 million copies selling through in the quarter and a shipment of 7-8 million copies worldwide.

Take Two's guidance of 250 to 300 million for the third quarter in early June left little room to account for shipments beyond 5-6 million.  At a $40 wholesale price, for example, 6 million would mean 240 million from the one title alone, leaving almost no room for Take Two's catalog sales from titles like Grand Theft Auto 4 and Bioshock 2.

How would an extra 2 million copies of Red Dead Redemption above guidance impact Take Two's third quarter?  With the title's large development costs being a mostly one time expense, each extra title sold will likely yield somewhere around a 50% operating profit.  That would net $20 per title or 40 million more dollars straight into Take Two's bank account, which would translate into .48 extra earnings per share in the quarter for a cash rich company whose share price is now at $9.82.  Moreover, it would suggest upside in future quarters from the hit title.

Take Two may have been a risky bet at one point, but with what should end up being $2 cash and significant earnings upside for the quarter and fiscal year (and profit in a year without a Grand Theft Auto release), Take Two's fortunes have certainly changed for the better.  In fact, if Take Two can manage to make a healthy profit for the year, followed up by consecutive years of highly profitable sequels from Grand Theft Auto and Red Dead Redemption (in addition to the killing off of their expensive Major League Baseball license after 2012), this stock is poised to be a multi-bagger from here.  The company is poised to be flooded with positive cash flow and earnings per share.

No wonder Carl Icahn and son have jumped into the game.