Why traders are gobbling up video game stocks

 by NM Partners

From the early days of Pong to being on the verge of diving into a Ready Player One-inspired metaverse, gaming has most certainly come a long way. And as the gaming market has continued to expand, diversify and rock the world of entertainment, that has come with an incredibly inflow of cash.

While the gaming industry was capped at a whopping $151.55 billion in 2019, it is chocked up to reach the absolutely astounding heights of $256.97 billion by 2025. Illustrating that the gaming industry is not only still witnessing growth, but it is doing so explosively.

With such immense growth seen on the horizon the main reason traders continue to pile into the space is clear: it is forecasted to be incredibly popular. And, of course, owners of stock see the trickle-down effects of such increases in value.

While that may be enough for you to run off and begin investing in the gaming industry, we certainly aren’t offering that (or any) kind of financial advice. Instead, it’s worth taking a look at why video game investing has skyrocketed in the last few years while taking note of some of the key stocks which traders continue to choose.

Going Public

It’s no secret that for stocks to become available a company has to go public on a stock exchange. While countless companies join the stock exchange every month, it’s worth noting that a number of heavy-hitting gaming companies have gone public in the recent past, signalling that many more may be to come.

This includes the likes of Roblox and Unity Technologies—creators of the incredibly popular Unity game engine. While Western behemoths like these may ring familiar as household names for gamers, it’s worth noting that such listings have been seen across the world, with countless publishing houses, developers and games companies going public.

Thus, the gaming stock market is currently one that is incredibly diverse—and it is certainly no longer dominated by the classic big-hitters.

What’s more, in lieu of the GameStop stock event last year, it’s clearly not only game makers who are seeing unprecedented attention. With the peripherals of gaming also seeing great attention on the stock market. While the case of GameStop may have been of a different breed, it’s easy to see that certain gaming companies—be them retailers, facilitators or eSports related—are sure to also benefit from the ever-growing games industry.

The Top Stocks Traders Are Buying

While there are countless gaming stocks on the market, there are three big hitters who should be on everyone’s radar. Especially for those new to the trading space.

Note: This is not financial advice, instead it acts as an educational resource to familiarise newcomers with the field of video game stocks. Any purchases or endeavours into video game stocks are at the individuals own risk.

Activision Blizzard (ATVI)

Despite being the largest video game software company by revenue in the US, gamers will be well aware of the rocky PR the company has rightfully been receiving over the past year.

Regardless, Activision Blizzard have proven themselves to be long term champions of gaming profits—owning some of the most ridiculously profitable franchises in the history of gaming. From Call of Duty and Overwatch to World of Warcraft and Candy Crush.

While the stocks have seen a 70% increase in the past five years, they are experiencing a lull due to the current PR fiasco. Potentially offering up an opportunity for shrewd investors—not financial advice.

Electronic Arts (EA)

More well known that Take-Two, EA sits at the forefront of mainstream gaming offering up titles from Star Wars and Battlefield to FIFA and The Sims to name a conservative few.

With revenue of over $5.5 billion in 2020, EA continues to grow despite being a long-term player in the video gaming industry.

While this longevity may see its current growth be a much more modest 50% in the past five years, it is shows itself as a pillar of security. And, as the company continues to acquire more and more subsidiaries such as Glu Mobile, EA may well break through into the mobile market.

Take-Two Interactive Software (TTWO)

The third-largest player in the New York based Take-Two interactive. While Take-Two are often better known through their many subsidiaries, gamers are bound to know, and almost certainly have played, their games.

From the 2K sports series’ to Grand Theft Auto, Bioshock and Borderlands, Take-Two is a behemoth in the world of American gaming. Currently they hold a team of over 5,000 developers, pulling in incredible revenues in the billions.

This stock has seen a 200% rise in the past five years.

Nintendo (NTDOF)

Perhaps the most iconic and beloved company in all of gaming Nintendo and their countless franchises need no introduction. Not only do they produce incredible games, but they also create hardware, making them a multifaceted company—a great target for investors.

With a revenue just shy of $12 billion in 2020, Nintendo has seen 60% growth over the past five years.

Investing is no child’s play. It takes commitment, patience and a fair risk tolerance. However, with the gaming industry set to continue its colossal growth into the future, it’s no surprise that many traders are flocking to the gaming sphere.

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