How to trade top video game companies
Many industries and sectors have been irreparably harmed by pandemic-induced lockdowns, but one industry has thrived in video games.
The gaming sector’s growth makes much sense; as billions worldwide were forced to stay in their homes, millions turned to games, many for the first time. resulting in an unprecedented boom for industry.
Top companies include Electronic Arts Inc, Blizzard-Activision, and Nintendo Co. Just how big is the gaming industry? In 2022, gaming has grown to a massive $200 billion industry, according to Global Games Market Report.
Today, we highlight this often-overlooked sector of the financial markets and reveal how you can get your share of one of the top-growth segments.
Growth in the gaming industry looks all but unstoppable in 2022; mobile gaming will generate an estimated $91.4 billion in revenue this year, according to a study. This accounts for almost 45% of the total gaming industry.
Revenue growth forecasts for 2022 reflect the importance of video games in people’s daily lives, especially the younger generations. Annual growth is expected to exceed $200 billion in total. Out of the $200 billion total, mobile gaming (smartphones) is forecast to generate $91.4 billion in annual revenue. This revenue is greater than PC and consoles combined.
Who’s spending money on games? According to Newzoo, approximately 50% of ‘Generation Alpha’, ‘Generation Z’ and ‘Millennial’ gamers spend money on video games.
Gaming numbers you should know: figures by Statista
- Revenue in the Video Games segment is projected to reach $200 billion in 2022.
- Revenue is expected to show an annual growth rate (CAGR 2022-2027) of 7.67%.
- Project market volume could reach $285.00bn by 2027.
- The number of users is expected to grow to 2.8 billion by 2027.
- User penetration will be 32.4% in 2022 and 35.6% by 2027.
- The largest segment is Mobile Games with a market volume of $152.50bn in 2022.
- Most revenue will be generated in the USA – $51 billion in 2022.
- The average revenue per user (ARPU) is projected to amount to US$79.92 in 2022.
How to trade gaming stocks
Like any asset, traders can buy and sell publicly trading gaming companies. Some of the world’s biggest gaming companies are reporting their latest earnings reports from October to November 2022. This will create market volatility and provide unique trading opportunities for traders looking to diversify their portfolios.
Some of these companies, such as EA, are truly massive, owning dozens of major game developers, which contributes tp billions in annual revenue. For example, you might not be familiar with EA company, but millions around the world play new FIFA gaming titles each year.
Gaming companies are only as good as their last release; if their games are great, revenue will be up, and vice versa. Traders can use this to their advantage to see which way a gaming company might trend on the day of its earnings release.
The world’s biggest gaming companies are releasing their earnings: EPS, forecast, market capitalisation
- November 7
Activision Blizzard (ATVI) 0.5072 EPS, 1.72 billion, 56.29bn
Roblox (RBLX) – 0.2972 EPS, 690.79million, 24.22bn
- Nov 8
Nintendo ADR (NTDOY), 0.5392 EPS, 2.49bn, 47.28bn
- Nov 10
Take-Two (TTWO) 1.38 EPS, 1.56bn, 18.09bn
Biggest players in the gaming industry
From the new Call of Duty to Fifa 23, there have been some major gaming releases in 2022 attracting millions of players globally.
Top 10 biggest video game companies in the world: Gaming Revenue
- Sony – $24.9 billion
- Microsoft – $16.3 billion
- Nintendo – $15.3 billion
- Tencent – $13.9 billion
- Activision Blizzard – $8.8 billion
- Electronic Arts – $5.6 billion
- Epic Games – $5.1 billion
- Take-two Interactive – $3.4 billion
- Ubisoft – $2.5 billion
- Bandai Namco – $2.0 billion
Look at two of the biggest gaming companies:
EA – the acquisition giant (Fifa 23)
Electronic Arts (EA) has had a great run on the share market with its stock up by 9% in the past month. The company released its latest earnings report on November 2. The EA player network now stands at 600 million accounts. Fifa 23 is now the most successful game in the franchise with 10.3 million players in the first week of its release.
The company had fantastic first-quarter earnings of 1.3 billion but failed to meet its Wall Street forecast – 1.75 billion vs 1.8 billion – reported in its latest earnings for Q2.
EA is currently a BUY, based on 13 analysts offering 12-month price targets for EA in the last 3 months. The average price target is $150 with a high forecast of $188.00 and a low forecast of $126. The average price target represents a 16.01% Increase from the last price of $129.73.
Blizard-Activision – Call of Duty, World of Warcraft generating billions
Activision Blizzard (ATVI) will report its third-quarter earnings on November 7. The makers of the hugely successful Call of Duty and World of Warcraft franchises have had a tumultuous two years. Wall Street analysts are expecting that the company will report revenues of $1.71 billion (-9% year-on-year), and earnings per share of $0.50 (-31% year-on-year).
All eyes are on Microsoft’s $69 billion Activision buyout, which is facing heightened scrutiny from regulators.
Less than a year ago, Microsoft announced its intention to acquire Activision Blizzard for $69 billion, which equates to $95 per share. ATVI shares rocketed above $82 when the buyout was announced in January 2022 but have since fallen to below $71 as of November 7.
Antitrust authorities in the USA, UK, and European Union are reviewing the proposed deal. If successful, it will make Microsoft the biggest gaming company in the world, beating Sony the current No.1.
‘Often overlooked by investors and retail traders’
Alon Roslyakov, CMTrading South Africa Office Manager, said: “The gaming industry is often overlooked by investors and retail traders. It’s, unfortunately, become its second biggest player entertainment sector. It is already bigger than Hollywood. The only other sector that can compete in that outshines it is the television industry.
“The growth rate of the game industry, from 2016 – 2020, has been from $18 billion to $160 billion respectively, which is higher than all the other competitors. Top games that are earning more than blockbusters such as GTA5, and Red Dead Redemption 2 show huge growth. GTA5, which generated more than $6 billion when compared to Avatar, the highest-grossing movie of all time, has only taken in $2.8 billion, showing the dominance of games.
“The four giants of the industry, Sony, Microsoft, Nintendo, and Tencent make up the majority of the market share. EA, which follows closely behind the big four, released its earnings leading to an increase of 3% in its stock.
“A controversial business model in the gaming industry, called microtransactions, makes up 77% of its total revenue share.
“In 2022, the Asia Pacific region is projected to account for 47% of the global games market, ahead of the USA which is 27%. The total gaming market will be worth $200 billion. This is up $170 billion in 2020 showing that the ever-growing gaming industry is overtaking the television industry.”
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