Gamer Gains: 3 Video Game Stocks for Today’s Young Investor
The video game industry has experienced massive growth in recent years. Its development traces its modest roots as a casual family entertainment system to its current widespread appeal and pop-culture impact. The eSports segment is also experiencing massive gains, valued at $1.38 billion in 2022. With eSports and video game streaming becoming mainstream, industry experts predict a compound annual growth rate (CAGR) of 21.9% by 2030.
That expected growth presents a compelling reason not to sleep on the video gaming industry’s future, especially as a young investor. This article looks at three companies we think are the best stocks for young gamers.
Microsoft Corporation (NASDAQ:MSFT) is a household name that almost everyone recognizes. The company is best known as the Microsoft Windows operating system and Microsoft Office software developer. More recently, Microsoft has expanded its business to cater to market segments like productivity and business processes, intelligent cloud, personal computing and gaming. Its gaming segment offers devices and accessories like the Xbox console and creations under its game development brand — Xbox Game Studios.
While Xbox consoles had a lackluster reception from its rivals in terms of gaming hardware, the company has been aggressively expanding its gaming divisions by acquiring gaming studios and producing exclusive games in-house. Some of its notable acquisitions were Mojang Studios (Minecraft), Bethesda Softworks (Elder Scrolls and Fallout) and Playground Games (Forza Horizon) — to name a few.
Microsoft is currently in the process of acquiring Activision Blizzard (NASDAQ:ATVI) for $68.7 billion. The company announced the move in early 2022 and shocked the gaming world, as ATVI is one of the most valuable gaming companies. Activision Blizzard owns several IPs like Warcraft, Overwatch and Diablo.
Should the deal get finalized, it could potentially push Microsoft’s Xbox and the company’s gaming division to a level playing field with its competitors. It may also disrupt the mobile gaming market, starting with Activision’s Call of Duty and Diablo Immortal. Bright prospects like this make MSFT one of the best stocks for gaming enthusiasts to start investing in.
NetEase (NASDAQ:NTES) is a technology company based in China operating in the online gaming, music streaming, social and online learning service segments. NetEase is well known for its gaming division, which has popularized games like Identity V, Knives Out, Eggy Part and LifeAfter. That division develops and operates online game services catering to PC and mobile gamers. The other segments provide customers access to online learning courses, social entertainment, advertising and music services.
NetEase is expected to have a brighter 2nd half of the year due to its strong title offerings, like the newly self-developed Justice Mobile. The company also has licensed games from big IPs like Marvel, Harry Potter and Lord of the Rings. Its pipeline beyond 2023 also promises gamers high-end titles like Where Winds Meet and plans to release other games globally.
NetEase recently reported its Q2 earnings and smashed expectations by reporting $13.88 earnings per share (EPS), instead of the expected $1.33.
Sony Group (SONY)
Sony Group (NYSE:SONY) is a household electronics giant engaged in different segments of industries like music, gaming and network services, movies, finance and other businesses. As for video games, the company is one of the biggest names, as it designs and produces the PlayStation console. Its current iteration, PlayStation 5, is considered the top console for many hardcore gamers, thanks to its powerful hardware and exclusive titles.
Sony has also been introducing various services to help increase its user base and enhance their experience; that includes PS Plus (monthly subscription service), PlayStation VR (virtual reality service) and PS Now (cloud gaming service).
The company’s subsidiary, Sony Interactive Entertainment, recently announced its new PS5 PlayStation Portal Remote Player accessory, set to launch by the end of 2023 for $199.99. While it does not compete with Nintendo Switch, it provides additional experiences to gamers and enthusiasts alike. The device is specifically made as a second screen to extend your gaming on multiple displays.
Sony’s other releases this year were the PlayStation VR 2 headset and Dual Sense Edge pro gaming controller. These steps, alongside a very capable management and synergy of its businesses, make it one of our video game stock picks.
On the date of publication, Rick Orford did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.