People all over the world are continually discovering new forms of entertainment, and esports is a nascent business that is quietly gaining popularity and rapidly conquering the globe. The online gaming sector is an attractive investment area for portfolio diversification, and the Esports sector is seeing exponential expansion.
What are esports?
ESports is a new genre of online video game in which individuals and teams compete on a large stage, either live-streamed online or in stadiums with spectators. It is similar to every other athletic sport in that its fan base is expanding. Those who make it to the top and play for the finest teams may earn exorbitant sums of money, making them millionaires by the time they reach their teenage years. Similarly to how you may invest in the world’s largest sports organizations, you can now invest in eSports teams and businesses. They are an excellent method to diversify a portfolio.
How do esports businesses make money?
Esports events make money by licensing their broadcasts, ticket sales, gear sales, and more. In addition to selling franchise rights to esports teams, video game companies also gain revenue from esports. Activision Blizzard, for instance, recently sold franchise rights to five Call of Duty League clubs. These sorts of sales may net gaming corporations millions of dollars.
Additionally, large esports competitions attract sponsorship deals and third-party advertisers. As the global esports audience expands, these platforms may become more popular with advertisers and generate more income as a consequence.
How quickly is the esports market expanding?
The market for watching professionals play video games is expanding quickly, and involvement and investment in the entertainment sector rose in 2020 in response to social distancing circumstances. Even as COVID-19 lockdowns slowed in 2021, the video gaming and esports sectors grew.
The industry’s infancy and the continuous unpredictability caused by the coronavirus make growth difficult to predict, and forecasts vary widely depending on how the esports business is defined. However, esports and gaming video content already have a substantial viewership. Nvidia (NASDAQ: NVDA), the market leader in gaming hardware, estimates that there are over 2.6 billion gamers globally, and the global viewership for esports is reaching 500 million. There are several opportunities to continue creating engaging content and refining profitable marketing methods.
This industry is undergoing significant transformation in the present economic situation. Check out the newest articles in the feed below.
The video game business is more speculative than the market as a whole, and numerous firms in this industry are valued based on prospects of strong long-term development. Nevertheless, the gaming business has a positive long-term prognosis. The majority of industry leaders have reported increased player involvement throughout the epidemic, and the worldwide demand for gaming and esports content is anticipated to continue to surge well after the virus passes.
Investors with broad stock portfolios likely already have positions in firms with at least some exposure to esports, especially those who own exchange-traded funds (ETFs) that buy video game stocks directly, such as the ETFMG Video Game Tech ETF (NYSEMKT: GAMR).
Ways to invest in esports
Gaming company stocks
Obviously, a significant portion of the income generated by esports goes to the firms engaged in esports. These firms include game creators and publishers, console and PC manufacturers, and accessory manufacturers.
Several gaming firms sell stocks through brokers; it is up to you to decide which broker to join up with and which company to invest in.
The initial step is to create a brokerage account on one of the numerous online brokerage websites. Then, you just invest your money and choose a firm to invest in. Activision Blizzard, which is known for franchises like Overwatch and Call of Duty, Tencent Holdings, which has League of Legends and Fortnite, and firms like NVIDIA and Logitech, which create PC components and gaming peripherals, are other gaming companies you may invest in.
Instead of making a huge investment in a single firm, it is strongly recommended to construct a portfolio with minor investments in a variety of businesses. Once you’ve made your investments, all you have to do is hope and wait for the value of the firms’ stocks to rise and then sell them if you’re satisfied.
Backing esports teams
Esports teams also get a significant portion of the industry’s revenue by winning awards in various leagues and securing sponsorship deals with well-known companies. As in sports, affluent investors seek to invest in esports teams, as Michael Jordan and Drake have done with Team Liquid and 100 Thieves, respectively. These teams were valued at 200 million dollars and 90 million dollars, respectively, as of 2018.
Unfortunately, not everyone has the means or contacts for such an investment, but if your favorite esports team is a public corporation, you may still invest in them. Luminosity Gaming and Enthusiast Gaming Holdings Inc. own Luminosity Gaming, and Chengdu Hunters and HUYA Inc. own Chengdu Hunters.
Should I purchase esports stocks?
The future of eSports is bright due to the accessibility of these video game events online.
In recent years, eSports have experienced a considerable increase in viewership among young people.
In 2021 alone, there were an expected 474 million viewers.
The difficulties caused by the global COVID-19 pandemic made the gaming business even more lucrative.
As conventional sports were discontinued or changed, many people turned to the video game industry for enjoyment.
Even now, video games provide a means of international communication.
Anybody may play ESports with an internet connection and the necessary hardware.
This accessibility will not only attract a large number of gamers from over the world, but it will also develop a devoted audience.
The gaming and eSports sectors will also continue to develop and expand.
In the previous several years, the mobile eSports industry has already experienced substantial innovation.
Types of esport stocks
You should examine four primary groupings of esports-related stocks while constructing your portfolio. The primary ones are those that make games and promote the creation of new competitive titles. The second category comprises all contestants and event organizers who actively contribute to esports’ value. This is also the biggest group, as it encompasses thousands of gaming groups and all third-party event organizers. The remaining two groups are esports hardware manufacturers and esports betting firms, which are neighboring industries. Both are essential to the flow of esports and add to the industry’s immense entertainment value.
1. Major game developers
Esports stocks are available for Electronic Arts, Activision Blizzard, Take Two, and Riot Games, among others. Not only are they well-established in the video game sector, but their size and worth are also expanding due to the enormous popularity of esports. These stocks provide the opportunity to invest in both esports and the broader gaming business.
2. Esports team and small companies
In addition to promising smaller esports businesses, esports teams are beginning to go public, enabling the direct purchase of their shares. Astralis, for instance, was one of the first esports team owners and media companies to go public, and they presently control three esports teams. You may also include publicly traded sports organizations that also own esports teams.
Not all teams are traded publicly. Team Solomid is a privately held company with a lot of large private investors. Hence TSM esports stock is not currently accessible for public trading. You may still help TSM and its successful esports teams by seeking investments in the game titles its teams play. The Blitz playing analysis and training software was bought by TSM in 2020 and now accounts for half of the company’s $45 million in annual revenue. This is a perfect example of esports diversifying in response to Covid-19’s influence. Cloud9 esports stocks are also unavailable, as neither the team nor the corporation has been publicly traded. Twenty-seven private investors or investment funds now support it.
3. Gaming hardware brands
You may also contact manufacturers of gaming hardware required for esports and competitive gaming. Logitech and Nvidia supply the gear esports players use, but they also have a market outside gaming for high-end PCs. These businesses are an excellent method to invest in esports stocks.
4. Esports betting companies
Esports bookies are becoming an integral element of the entire esports industry. They no longer only give odds but actively organize tournaments, support gaming groups, and develop a complete ecology of entertainment inside the business. Those that are publicly listed or go through fundraising rounds should pique the interest of investors since the union of betting with esports is becoming quite lucrative.
Best esports stocks to buy
Esports Entertainment Group Inc. (NASDAQ: GMBL)
Esports Entertainment Group will be examined initially (EEG). EEG is a comprehensive esports and online gaming organization. The company’s online gambling portfolio enables esports enthusiasts to make on their preferred esports players. This would essentially make GMBL stock a legitimate investment in the esports business. The company’s stock price has increased by more than 38 percent so far this year. The fundamental question is whether GMBL stock can continue to rise.
EEG has major agreements with both esports and traditional sports groups, while the future of these relationships is uncertain. Regarding the latter, the NFL, NHL, NBA, and FIFA are all well-known. In addition, the business operates through iGaming, casinos, and internet cafés. This would allow EEG’s portfolio to encompass the entirety of esports and gaming today. Despite all of this, the corporation shows no signs of slowing down in the near future. EEG is currently collaborating with the Hall of Fame Resort and Entertainment Company as of early this month (NASDAQ: HOFV). EEG will provide esports opportunities to Hall of Fame Village through this partnership.
Corsair Gaming is off to a good start for the week as Wall Street Bets discovers its latest meme stock. With the increase in attention from Reddit, CRSR stock trading has increased, and that appears to be the current trend on the stock market. Corsair Gaming, for those unaware, is a distributor of high-end video game equipment aimed at gamers who wish to elevate their gaming experience. However, if you are an eSports aficionado, you are likely aware of the items that Corsair offers.
Corsair’s sales have consistently increased in tandem with the surge in popularity of esports. Based on its first-quarter statistics, the company’s overall sales increased 72 percent year over year to $529 million. In addition, the company’s gross margins increased to 30.3% from 25.5% in the prior-year quarter, demonstrating its continued profitability growth. Despite the company’s outstanding first-quarter sales, the management’s modest forecast of an 18 percent gain in revenue for the entire year indicates an impending downturn. Despite management’s neutral expectations, there is little doubt that eSports continues to expand at a rapid rate. Consequently, CRSR stock should reap the rewards since Corsair holds the number two market share in the business.
Allied Esports Entertainment Inc. (NASDAQ: AESE)
Allied Esports Entertainment’s global productions and events concentrate on the eSports sector.
In addition to real tournament venues, the firm collaborates with a number of leading streaming applications to offer matches to the people.
There are also meet-and-greets and instructive teaching sessions with industry experts.
In addition to a large-scale stadium, Allied Esports delivers eSports trucks to various sites around the country.
At a price of less than $2 per share, Allied Esports is an attractive penny stock with future development potential.
The company’s third-quarter financial results were quite solid and augur well for its future.
Tencent Holdings (OTC: TCEHY) has its hands in many pies. You could argue that if there is an esports title out there, it’s partly owned by Tencent. The Chinese media and tech conglomerate owns Riot Games fully and, by extension, it owns the company’s flagship esports game, League of Legends. The company’s investments include popular esports games such as Honor of King, PlayerUnknown’s Battlegrounds, and Fortnite.
Tencent Holdings has an underlying strength because the conglomerate controls numerous streaming platforms, including Huya Live, through its subsidiary Tencent Video. The stock was buffeted by growing tensions between China and the United States, which is always something you should be on the lookout for, but overall, Tencent is a stable and good long-run choice.
Verizon Communications (VZ)
Verizon Communications (NYSE: VZ) is one of the stocks to purchase that is not instantly associated with the esports phenomena. However, for this business to make the next step forward, 5G wireless speeds cannot be ignored. Consequently, you should pay special attention to VZ stock.
In fact, one may make that VZ stock is the most significant name among esports stocks. History alone is sufficient to comprehend this argument. When the Internet was initially introduced, connection rates were quite slow. And by a pedestrian, I mean that you could probably walk quicker than you could submit the information.
Obviously, this obsolete technology hampered the emergence of credible esports competitions. However, with the 5G speeds of the next generation, gamers may enjoy cutting-edge visuals with minimal performance lag. Ultimately, there is likely nothing more aggravating than connectivity troubles interrupting an otherwise wonderful encounter.
The second reason to purchase VZ stock is that 5G enables game innovation. Most likely, esports will migrate to new platforms such as virtual reality or augmented reality. This demands huge data transfers, which a 5G network can only accomplish.
Activision Blizzard (NASDAQ: ATVI)
Activision Blizzard is the business behind blockbuster video games such as Overwatch, Call of Duty, and World of Warcraft. The firm has an exceptional track record of developing new intellectual assets and establishing leagues. Activision Blizzard states, “Our esports objective is to be the most inventive, scalable, and valuable creator of global competitive entertainment.” It is also crucial to know that Activision Blizzard recently reached an $18 million settlement agreement in response to charges of sexual harassment and discrimination against women in the workplace. Although it appears like Activision Blizzard is attempting to improve its “frat boy” culture, the claims may cause investors to hesitate.
Roblox Corp. (RBLX)
Roblox is a firm whose platform enables players to make their own games, connect with one another, and play in real time over the internet. These realms have come to be known as the “metaverse,” and they may eventually propel esports to the next level. Roblox, according to Freeman, is one of the most inventive firms in the gaming industry, and he expects an astonishing 33 percent compound annual increase in bookings over the next three years. According to Freeman, Roblox has a community of around 8 million player-developers. CFRA has a “strong-buy” rating and a $96 price objective on RBLX stock, which closed on September 28 at $77.05.
Enthusiast Gaming (EGLX)
Enthusiast Gaming Holdings Inc. is involved in the media, content, entertainment, and esports industries in the United States, Canada, and abroad. The company operates an online network of approximately 100 gaming-related websites; owns and operates Enthusiast Gaming Live Expo, a video-gaming expo; provides management and support services to professional gamers; and owns and manages esports teams for Call of Duty, Madden NFL, Fortnite, Overwatch, and Super Smash Bros.
The stock of Enthusiast Gaming started the day at C$6.99 after closing the previous session at C$7.02. The most recent cost was $6.68 (25-minute delay). Enthusiast Gaming is a publicly traded company with a trailing 12-month sales of about CADkr184.5 million and 215 employees. All indicated costs are in Canadian dollars.
Electronic Arts Inc. (NASDAQ: EA)
Despite Electronic Arts’s ups and downs in 2021, the stock has been largely steady, gaining less than 2 percent altogether. Nevertheless, there is again another firm that many consider undervalued.
Electronic Arts, also known as EA, is not your average video game producer. The developer has partnered with the National Football League (NFL), Fédération Internationale de Football Association (FIFA), and a number of other huge sports properties to create a series of games such as Madden NFL and FIFA. The firm also publishes non-sports-related titles such as The Sims and Apex Legends.
In the realm of professional gaming, few esports companies have earned as much attention as Electronic Arts. Gamers from all over the world want to compete for six-figure rewards at the company’s most popular tournaments in the gaming industry.
If EA’s history is any indicator, investors have much to look forward to in the future.
One of the company’s upcoming gaming releases is one of the company’s greatest attractions for investors. EA’s sports-related products have performed exceptionally well, and the firm released Battlefield 2042 in November 2021, another installment in the iconic Battlefield series. Numerous analysts anticipate that this will be the franchise’s best-selling game to date, paving the way for robust Q4 earnings since the game is likely at the top of many Christmas wish lists.
Overall, EA is a power to be reckoned with in the gaming industry, and due to the stock’s dismal performance in 2021, a clear undervaluation is emerging, paving the way for significant growth potential.
Skillz (NYSE: SKLZ)
Skillz is an esports stock and mobile gaming platform incorporated into various iOS and Android apps. Using Skillz, gamers may compete with other players from across the globe. There are now many moving parts in the esports industry. Skillz technology might play an essential part in unifying the sector.
There are two noteworthy aspects of Skillz’s company. First, the company has had 23 consecutive quarters of sales increase. This trend continued in Q3 2021 when the company recorded sales of $102 million, and this was a 70% increase from 2020. Second, their squad has garnered a great deal of recognition. Fast Company placed it among the top 50 “Best Workplaces for Innovators” in Q3 2021. Skillz just welcomed a senior-level Amazon developer.
In general, a firm’s management staff is far more significant than the company itself. This is because, ultimately, individuals propel enterprises forward. People solve issues and generate new concepts. It will likely be successful if the appropriate individuals are in charge of a firm. Based on its accolades, Skillz appears to be led by a talented group. Additionally, 23 consecutive quarters of revenue increase is a credit to the team’s efforts. These two criteria make Skillz one of the most important esports stocks to watch.
In addition, Cathie Woods made a temporary investment in Skillz through her Ark Innovation Fund. However, she just sold a substantial portion of her position.
The industry of esports tournaments is among the most intriguing in the world. The next generation is gradually adopting eSports as a new cultural norm, indicating the industry’s great growth potential. Especially if you are new to the concept of investing in stocks, esports stocks appear to be a good choice.