Despite its size and meteoric growth, the video-game industry still has room for development. It has been identified by many as one of the few winning sectors in this pandemic. For the past two years, business shutdowns and social distancing have limited people’s entertainment options, driving them to play video games at home.
Game downloads across the world spiked during lockdowns. Companies such as Nintendo (NTDOY) and Electronic Arts (NASDAQ: EA) are among the leading video-game companies that have reported revenue growth due to increased consumer interest globally.
Below are three of the recent fastest-growing video-gaming companies:
|Stock price (US$)(27/08/21)||Market Cap (US$bn)||EPS||Revenue growth (%)|
|Enthusiast Gaming Holdings Inc. (EGLX)||4.28||0.676||-0.32||333.2|
|Activision Blizzard Inc. (ATVI)||116.345||64.11||3.34||24.6|
|Take-Two Interactive Software Inc. (TTWO)||214.625||18.51||5.61||9.2|
Enthusiast Gaming Holdings (NASDAQ: EGLX)
Founded in Canada, Enthusiast produces video games and hosts eSports events on social media. It uses its platform to connect eSports and video-game fans worldwide.
2Q21 was an exceptional quarter for Enthusiast, which expects further sequential revenue growth and margin improvements through the rest of the year. This would be driven by momentum in its direct sales and pipeline of acquisitions.
Activision Blizzard (NASDAQ: ATVI)
ATVI has three main divisions. It is the largest video-game software company in the video game sector by revenue.
Playstation, Xbox and PC games are just a few of the interactive entertainment titles it develops, publishes and distributes. Its main franchises include World of Warcraft and Call of Duty.
ATVI’s video-game properties are ranked among the most valuable in the industry, contributing heavily to gaming’s growth and development. The company has released multiple successful games under CEO Bobby Kotick’s leadership and has consistently distributed dividends since 2010.
Take-Two Interactive Software (NASDAQ: TTWO)
Take-Two develops, publishes and markets interactive entertainment for consoles, personal computers, smartphones and tablets. Playdots, Rockstar Games, Private Division, 2K and Social Point are some of its game development and publishing ventures.
A stellar performance by its core franchises has boosted its valuations rapidly. Its Grand Theft Auto series is one of the most profitable in gaming entertainment. This series is also the company’s biggest and most important product to date.
Take-Two’s Red Dead Redemption series has received accolades while its NBA 2K basketball series is a leading sports game. That’s not all. Helping to drive growth are smaller series and other development programmes.
Take-Two’s top franchises consistently deliver exemplary products in the complex and resource-intensive world of game development. This is thanks to the company’s repeated ability to delight players and generate high levels of engagement and in-game spending. As a result of its strong financials, Take-Two has also been able to pursue growth opportunities in mobile games and eSports.
The following are the three best-value video-game stocks on our watchlist. They have the lowest P/E ratios in the video gaming industry.
|Stock price (US$)(27/08/21)||Market Cap (US$bn)||P/E ratio|
|Nintendo Co. Ltd.||353.86||62.07||13.22|
|SciPlay Corp. (SCPL)||18.75||2.35||121.62|
|The9 Ltd. (NCTY)||14.99||0.176||0.89|
NTDOY is a Japanese multinational consumer electronics and video-game company. In addition to portable and console game machines, it makes software, mobile devices and consumer electronics. NTDOY is well known for its game consoles Nintendo Wii, Nintendo DS and Nintendo 3DS.
SciPlay Corp. (NASDAQ: SCPL)
SCPL develops and publishes digital games for mobile platforms and the web. In addition to casino games, it offers casual and bingo games such as MONOPOLY SLOTS and Bingo Showdown.
The9 (NASDAQ: NCTY)
NCTY is a Chinese Internet company specialising in mining cryptocurrencies and developing proprietary or licensed online games. It offers mobile, TV and online virtual community games.
For investors who are interested in ETFs, the following are three that invest in video-game and related equities.
The first is the Wedbush ETFMG Video Game Tech ETF (GAMR). Started in March 2016, one of its top holdings is WeMade, a publisher of video games in South Korea. Another is Roblox (RBLX), a US-based video-game platform.
NERD (Roundhill Bitkraft Esports & Digital Entertainment ETF) began trading in June 2019. Its top holdings are Corsair Gaming (CRSR) and Activision. As well as Modern Times Group, Tencent and Turtle Beach (HEAR), NERD holds stakes in companies like Modern Times Group, a Swedish digital entertainment firm.
The VanEck Vectors Video Gaming and eSports ETF (ESPO) has been trading since October 2018. Top holdings are graphics chip maker Nvidia (NVDA), Singapore-based Sea (SE) and Tencent. Additionally, it owns significant stakes in Nintendo and Advanced Micro Devices (AMD).
The world loves entertainment of all sorts and video games are a particularly compelling form of entertainment. Over the next few years, video games will likely continue to grow in popularity globally, allowing game publishers to expand in both developed and emerging markets by reaching new players.
Some video-game companies may not be able to continue creating successful franchises, but those that can help to develop the industry further will likely reap the greatest rewards. It may be worth the while of investors to keep in touch with this industry.
Click here to open a POEMS trading account
- • Enthusiast Gaming Holdings Inc. (NASDAQ:EGLX) https://www.enthusiastgaming.com/investors/
- • Activision Blizzard (NASDAQ: ATVI) https://investor.activision.com/news-releases/news-release-details/activision-join-nasdaq-100-index
- • Take-Two Interactive Software Inc. (NASDAQ: TTWO) https://ir.take2games.com/
- • Nintendo Ltd. (NTDOY)https://www.nintendo.co.jp/ir/en/index.html
- • The9 (NASDAQ: NCTY) https://www.the9.com/en/
- • SciPlay Corp. (NASDAQ: SCPL) https://investors.sciplay.com/
Important Information: This report is prepared and/or distributed by Phillip Securities Research Pte Ltd (“Phillip Securities Research”), which is a holder of a financial adviser’s licence under the Financial Advisers Act, Chapter 110 in Singapore.
By receiving or reading this report, you agree to be bound by the terms and limitations set out below. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.
The information and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this report has been obtained from public sources which Phillip Securities Research believes to be reliable. However, Phillip Securities Research does not make any representation or warranty, express or implied that such information or Research is accurate, complete or appropriate or should be relied upon as such. Any such information or Research contained in this report is subject to change, and Phillip Securities Research shall not have any responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith.
Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this report are as of the date indicated and are subject to change at any time without prior notice. Past performance of any product referred to in this report is not indicative of future results.
This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This report should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgement. The fact that this report has been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this report is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this report involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.
Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this report should take into account existing public information, including any registered prospectus in respect of such product.
Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities), brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have participated in or invested in transactions with the issuer(s) of the securities mentioned in this report, and may have performed services for or solicited business from such issuers. Additionally, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have provided advice or investment services to such companies and investments or related investments, as may be mentioned in this report.
Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an adverse effect on the value, price or income return of the investment.
To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may at any time engage in any of the above activities as set out above or otherwise hold an interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this report. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, which is not reflected in this report, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the issuance of this report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of this report.
The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction.
This report is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The products mentioned in this report may not be suitable for all investors and a person receiving or reading this report should seek advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products.
This report is not intended for distribution, publication to or use by any person in any jurisdiction outside of Singapore or any other jurisdiction as Phillip Securities Research may determine in its absolute discretion.
IMPORTANT DISCLOSURES FOR INCLUDED RESEARCH ANALYSES OR REPORTS OF FOREIGN RESEARCH HOUSES Where the report contains research analyses or reports from a foreign research house, please note: (i) recipients of the analyses or reports are to contact Phillip Securities Research (and not the relevant foreign research house) in Singapore at 250 North Bridge Road, #06-00 Raffles City Tower, Singapore 179101, telephone number +65 6533 6001, in respect of any matters arising from, or in connection with, the analyses or reports; and (ii) to the extent that the analyses or reports are delivered to and intended to be received by any person in Singapore who is not an accredited investor, expert investor or institutional investor, Phillip Securities Research accepts legal responsibility for the contents of the analyses or reports.
If Distribution is to Australian Investors This report is produced by Phillip Securities Pte Ltd and is being distributed in Australia by Phillip Capital Limited (Australian Financial Services License No. 246827). This report contains general securities advice and does not take into account your personal objectives, situation and needs. Past performance is not a reliable indicator of future performance. Please read the Disclosures and Disclaimers set out above. By receiving or reading this report, you agree to be bound by the terms and limitations set out above. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.