The best video game stocks to invest in

With so many of us stuck at home during the Covid-19 pandemic, it’s no wonder the video game industry has exploded in recent times.

After all, if you can’t leave the house for real, you can at least pretend to go out and smell the pixelated roses. Likewise, with online multiplayer games, it is even possible to hang out with friends in fake exteriors.

It’s definitely more fun than another Zoom quiz night with the in-laws.

And so, with player engagement at an all-time high, the value of the companies that develop and market the games they sell has also grown impressively.

Industry Context

In 2021, the video game market in the United States alone is worth more than $ 65 billion.

Things have come a long way since Dr. William Higinbotham designed the very first video game in 1958. Known as Tennis for Two, it eventually became the model for the retro arcade game Pong.

Nowadays we can do a lot better than two blank lines on a screen.

Players can stroll through the stunning landscapes of Assassin’s Creed Valhalla or the hyper-real post-apocalyptic landscapes of The Last of Us Part 2.

As PCs, game consoles, and even cellphones become more and more powerful, it has become possible to bring incredible worlds to life. It’s especially appealing when most of the real world is off limits.

So, from Activision to Zynga, here are some of the top performing stocks to invest in right now.

Nintendo

Nintendo (TYO: 7974) is, of course, a household name. The company is behind franchises like the global phenomenon Pokémon, as well as Super Mario and The Legend of Zelda.

Since the start of 2020, shares of this industry titan have climbed 27% and its market capitalization of 7.3 trillion yen ($ 66 billion) cannot be disputed.

Besides the games themselves, the company is also heavily involved in the console business. The company created the Game Boy and all of its descendants, as well as the successful Nintendo Wii console.

The latest addition to the family is the ever popular Nintendo Switch, which transforms from a home console to a portable device. The device costs $ 299 in the United States.

Since the 2017 launch, the company has sold more than 89 million Nintendo Switch consoles Sony (TYO: 6758 | NYSE: SONY) Play Station 3 and that of Microsoft (NASDAQ: MSFT) Xbox 360.

In its most recent fiscal year, which ended March 31, Nintendo’s net sales jumped 34% to 1.76 trillion yen ($ 16 billion) from 1.31 trillion yen in the year.

Meanwhile, operating profit of 640 billion yen ($ 5.8 billion) broke the previous record of 501 billion yen in fiscal 2019. This also greatly exceeded profit of 352 billion yen for fiscal year 2020.

Given its strength and continued popularity, this title is definitely one to watch.

Activision Blizzard

With powerful franchises like Call of Duty and World of Warcraft, Action blizzard (NASDAQ: ATVI) is one of the world’s largest video game developers.

The company, which has a market capitalization of $ 60.8 billion, announced a 25% increase in net sales in 2020 to $ 8.1 billion, from $ 6.5 billion in 2019.

The Call of Duty first-person shooter franchise hit a record high in 2020, with over 100 million monthly active players. The game, which offers free and premium options, has seen its premium sales increase by 40% year over year.

Shares of the company have risen 33% since the start of 2020, getting a big boost from a boom in tech stocks during the pandemic – especially those involved in home entertainment like video games and gaming. video streaming.

However, Activision Blizzard’s reputation has taken a hit lately, as has its share price.

The California Department of Fair Employment has filed a lawsuit against Activision Blizzard. This concerned allegations that he violated state laws regarding equal pay and civil rights.

Since the complaint was filed on July 20, following a two-year investigation, shares have fallen 15%.

The company disputes the allegations, which include discrimination against female employees, unequal pay and sexual harassment. He called the state allegations “Distorted, and in many cases wrong”.

While things are somewhat unclear when it comes to the lawsuit, the accompanying drop in the stock price could end up being an affordable investment opportunity. Watch this place.

Electronic arts

As the company behind the successful football-based FIFA video game franchise, there is a lot to recommend about Electronic arts (NASDAQ: EA).

With a market cap of $ 40.5 billion and shares up 33% since the start of 2020, it’s a powerful company. And it has only gained power since the start of the pandemic.

In its fiscal year ended March 31, the company’s net sales increased 1.8% to $ 5.6 billion from $ 5.5 billion in fiscal 2020.

Meanwhile, in August, EA said it had reached 31 million FIFA 21 players, up 6 million from the figure in its annual report – released in May.

Apex Legends, the company’s free-to-play battle royale game, had reached 13 million active users by August. The game is a serious challenger to Epic Games’ hugely popular Fortnite Battle Royale, which took the world by storm in 2017.

For those not in the know, battle royale in this context means a game where players go head-to-head to take down their opponents and become the last player, or team, to stand. These games have a so-called “safe zone” area which shrinks over time and players should avoid being trapped outside.

The term battle royale comes from a Japanese film released in 2000 under the same name and with a similar premise.

The company struck a $ 2.1 billion deal in February to Glu Mobile, instantly stepping up its mobile gaming business. This as the world of video games has experienced massive growth amid the increasing availability and capabilities of smartphones.

With successful franchises and continued adaptation to trends with the purchase of Glu Mobile, investors should definitely consider EA.

Zynga

Speaking of mobile games, Zynga (NASDAQ: ZNGA) is a serious competitor in this massive market.

Like EA and Activision Blizzard, the company’s shares have risen 33% since the start of 2020.

In addition, revenues jumped 70% in 2020 to $ 1.7 billion from $ 1.0 billion. This is after Words With Friends, a multiplayer word game similar to Scrabble, which hit an all-time high in terms of quarterly revenue and bookings in the fourth quarter.

Zynga has a market cap of $ 9.0 Billion, and in addition to Words With Friends, it offers popular titles like Hair Challenge, High Heels! and Tangle Master 3D, all with over 100 million downloads worldwide.

Globally, there are 3.8 billion smartphone users according to Statista – 48% of the population – an even higher increase from 2.5 billion in 2016.

As the market continues to expand and the company continues to add to its large number of popular titles, the potential for future growth remains high. Investing in this business is a chance to capitalize on the trend.

Take 2 Interactive

The last in the list is Take 2 Interactive (NASDAQ: TTWO), the developer of the Red Dead and Grand Theft Auto franchises.

With stocks up 28% since the start of 2020, this company, like many others on this list, was able to benefit from the surge in interest in gaming stocks from the pandemic.

He’s clearly a great performer in space, and his game Grand Theft Auto V is one of the most critically acclaimed and commercially successful titles of all time, having sold over 145 million units.

Of course, the company’s $ 18.3 billion market capitalization is also hard to ignore.

In fiscal 2021, Take 2 Interactive’s net revenue increased 10% to $ 3.4 billion from $ 3.1 billion in fiscal 2020.

More recently, the company reiterated its outlook for fiscal 2022 (end of March) despite its choice to delay the release of extended and improved versions of its Grand Theft Auto V and Grand Theft Auto Online games for Grand Theft Auto V and Grand Theft. Auto Online.

These were due to launch in November, but the company is retaining “Allow more time to further refine the final products”and these releases are now scheduled for March 2022.

It was the combination of strong, persistent engagement trends for its existing games and new games slated for release the remainder of its fiscal year that allowed the company to reiterate its forecast despite this setback.

The resilience, along with the continued success of Grand Theft Auto, should certainly grab the attention of investors.


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