Video game stocks are on fire in 2017. Investors shying away from video game stocks in their portfolio are missing out on rapid growth from seasoned companies and an industry that’s set to explode. The industry’s popularity is set to soar even higher in the next three years, as professional eSports continue to grow in popularity and offer gamers millions in prizes. The growth will only continue now that eSports has been added to the olympic roster in 2022.
The video game stocks that are outperforming this year are:
1. Activision Blizzard (ATVI)
Year-to-date, Activision Blizzard is destroying expectations, rising 58.04% on the NASDAQ with the company’s stock up 12.74% in the past 30 days and 25.93% in the past 90 day period. The video game developer’s stock is up 47% over the past 52-week period.
The company’s stock is up over 300% in the last five years, too, making it a hot stock to buy for investors.
ESports will continue to play a major role in the growth of the company, with the company maintaining four of the top ten viewerships on Twitch, a streaming platform. The platform, dedicated to gamers, has the following Activision Blizzard games in their top 10 most viewed games:
- Hearthstone
- Starcraft II
- Heroes of the Storm
- Overwatch
Activision’s growth isn’t expected to slow, with the company purchasing Major League Gaming’s assets in 2015 and launching an e-sports unit. The company also signed a streaming deal with Facebook (FB) to broadcast the company’s games on Facebook Live.
Call of Duty is one of the company’s key franchises, selling over 250 million units.
The company also boasts millions of monthly subscribers for their World of Warcraft franchise. The company’s Q1 2017 earnings impressed investors, with earnings per share up 17% on the year and sales rising 19% to $1.73 billion on the quarter.
2. Electronic Arts (EA)
Electronic Arts has spent a lot of time expanding their mobile gaming pipeline, but the company has started to dive head first into the world of e-Sports with the launch of its own e-sports unit.
Despite the company’s slow emergence into e-sports, the company has performed well, with the company’s stock up 39.08% year-to-date and 18.03% in the last 30-day period. Electronic Arts stock is up 26.58% in the last 90-day period, with the company’s 52-week change at 45.37%.
Electronic Arts has a market cap of $26 billion, and the company’s share price is up nearly 400% in the past five years.
EA is a strong stock to add to your portfolio, and the company has several strong games, including:
- FIFA
- Battlefield
- Star Wars
EA’s fiscal 2017 fourth-quarter results were released earlier in May, with revenue up 17% to $1.527 billion and profits rising to 22%, or $1.325 billion. The company’s operating income rose from $536 million to $717 million, a year-over-year change of 34%.
The company’s Battlefield 1 game experienced a 50% surge in players with, more than 19 million people playing the game.
3. Take-Two Interactive (TTWO)
Take-Two Interactive is on a roll in 2017, with the company’s stock up over 55% since the start of the year and over 33% in the trailing 90-day period. The video game maker’s stock is up 22% in the past 30-day period and 15% in the last five days.
The company’s five year performance has the stock up over 270% with no signs of slowing.
Market conditions have helped the developer excel in recent years. This is even with the company delaying Red Dead Redemption 2 until FY19.
The company released its Q4 fiscal 2017 earnings, with GAAP EPS of $0.89, up from $0.48 a year prior. Adjusted earnings per share was $0.65. Net revenue increased 7.93% year-over-year to $407.1 million, beating estimates of $359.1 million.
The company’s pipeline of games includes:
- Grand Theft Auto V
- Mafia III
- Sid Meier’s Civilization VI
Digital revenues rose 43.1% t o $278.7 million and accounted for 49% of the company’s total revenue on the quarter. The company’s physical sector saw sales rise 60.6% to hit $292.9 million.
Gross margins were 44.9%, with operating profits of $111.5 million.
The company maintains $1.39 billion in cash and has several large titles in their portfolio. The large titles are expected to pad the company’s bottom line.
Video game stocks are surpassing investor expectations, and these three companies have a strong consumer base, big-named titles and a sound history of share growth that can’t be ignored.
Ben Myers
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