The universe of gaming and esports has long garnered attention owing to the segment’s ability to provide an impressive mode of entertainment. In fact, this world of indoor gaming has been stealing the limelight further in the last few months because of the rampant coronavirus pandemic that confined millions across the globe to their homes.
Let us thus take a look at this arena from an investment perspective.
Coronavirus Pandemic Buoys Video Game Space
It is interesting to note that the popularity of the video game space has increased significantly in the past few months. The COVID-19 outbreak, first reported in January from its hotspot — Wuhan region of China — has confined people around the world to their homes. This shutdown prompted consumers to seek different modes of entertainment, of which gaming is a key constituent.
This could be one of the reasons why top companies in the space banked in profits when the broader markets incurred losses, especially in the past month. While the broader S&P 500 Index shed its value, shares of leading companies reaped profits.
eSports a Growing Trend
The popularity of video games, by the way, did improve for a pretty long time, mostly pushed by change in gaming technology, altering preferences for entertainment among consumers, rising accessibility to internet, high-end smartphones and gaming devices, etc.
This popularity has led to rapid advancement in the gaming and esports space. Top companies such as Electronic Arts Inc. (EA - Free Report) , Tencent Holdings Limited (TCEHY - Free Report) , Activision Blizzard, Inc. (ATVI - Free Report) , Take-Two Interactive Software, Inc. (TTWO - Free Report) and Verizon Communications Inc. (VZ - Free Report) have garnered fame and revenue rapidly because of their unique intellectual properties (diverse genre and story-lines, distinct graphics and ease of interaction) in the video game industry.
For example, Electronic Arts’ FIFA, Madden, Battlefront, Star Wars andApex Legends, Activision Blizzard’s Overwatch, Call of Duty, Starcraft, World of Warcraft and Hearthstone, Take-Two Interactive Software’s Grand Theft Auto, NBA 2K, Red Dead Redemption and WWE 2K are some of the high-revenue generating video game and esports franchises in today’s gaming realm.
eSports Market Ups Its Game
The sports industry has discovered remarkable growth with video games as the segment has attracted vast revenue streams over the past few years.
In fact, the overall esports market is anticipated to grow from $694.2 million in 2017 to $2,174.8 million by 2023, witnessing a CAGR of 18.6% in the 2018-2023 period, per MarketsandMarkets.
3 Stocks to Consider
We have, therefore, chosen three stocks from the gaming and esports space that carry a Zacks Rank #2 (Buy) or #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Electronic Arts have moved 5.5% north in the past one month, clearly surpassing the S&P 500 index’s decline of 9.3% in the same timeframe. The company’s expected earnings growth rate for the next quarter is more than 100%. Electronic Arts, which belongs to the Zacks Toys - Games - Hobbies industry, carries a Zacks Rank #2.
Shares of Tencent have moved 4.5% north in the past one month. The company’s expected earnings growth rate for the current year is 18%. Tencent, which belongs to the Zacks Internet - Services industry, carries a Zacks Rank #3.
Shares of Activision Blizzard have have moved 7.4% north in the past one month. The company’s expected earnings growth rate for the current year is 10.7%. Activision Blizzard, which belongs to the Zacks Toys - Games - Hobbies industry, carries a Zacks Rank #3.
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