Few investment sectors have enjoyed as much resilience during this novel coronavirus pandemic quite like the video game industry. Although gaming giants like Electronic Arts (NASDAQ:EA) suffered volatility in March as panic took over the markets, EA stock quickly rebounded. With lockdowns becoming part of the new normal, gamers had nothing but time on their hands.
Really, it was a once-in-a-lifetime opportunity for this rapidly exploding community. Ordinarily, either parents or significant others would prefer one to stop gaming and to spend more time performing constructive activities. However, with government leaders and public health officials urging people to stay at home, EA stock enjoyed a huge surge in demand.
Still, it’s fair to ask now that the low-hanging fruit is gone whether EA stock has any catalysts remaining. With all states reopening their economies to varying degrees, can Electronic Arts compete in a crowded entertainment landscape?
I believe it can. For one thing, the U.S. and several developed nations saw a sizable leap in time spent playing games during the midst of the crisis. While you’d expect this statistic to decline as coronavirus cases fade, I expect some of this demand increase to be permanent. Primarily, corporations are rethinking the idea of work, specifically the concept of remote work.
If we see such a transition, that gives gamers more time to enjoy their passion.
Second, even though states are reopening, the available entertainment options are limited. For example, AMC Entertainment (NYSE:AMC) plans to have their theaters open to near-100% capacity by July. This gives home entertainment platforms additional time to steal market share, potentially lifting EA stock.
Plus, with gaming at your home, you don’t have to follow strict mitigation protocols.
EA Sports Is the Golden Ticket for EA Stock
Owning several popular gaming franchises, it’s difficult to pick out a favorite without stirring debate among the Electronic Arts fanbase. But from a business and investment perspective, there’s one that stands out far above the rest: EA Sports’ Madden series.
As you know, Electronic Arts has an exclusive license to make NFL simulation games. What this means is that Madden players are exposed to the highest level of authenticity, short of suiting up for an actual game. The game developers have incorporated realistic playbooks and strategies into this series, making it heads and shoulders above other sports-related titles.
Thus, in any year, you can expect rabid support for any Madden release. However, this year should be a spectacular one for EA stock.
During the lockdowns, the Covid-19 pandemic removed most components of American popular culture. Of course, this included sports, which was a shame. Typically, sports brings communities and the nation together.
But as the U.S. gradually opened, major sports leagues planned their return. First up was Nascar, then later Indycar. Both auto racing leagues experienced a significant boost in TV viewership, which was notable for an obvious point. In the crowded American sports market, motor racing tends to be an afterthought.
However, as it relates to EA stock, this dynamic demonstrates the power of pent-up demand. Further, the NFL — which has a close relationship with EA Sports — may enjoy a complete season. If the coronavirus doesn’t strike us in a second wave, this will have big implications for the entire NFL synergy.
Keep in mind that according to a 2018 Gallup poll, football ranks as the most popular sport to watch. Most significantly, baseball and basketball have not been able to steal market share.
A Massive Year Awaits Electronic Arts
Frankly, we live in a 24/7 NFL news cycle. No other sport dominates the airwaves quite like football — even during the off season! But without other sports to satiate fans as they wait for the upcoming season, I anticipate explosive demand. And that should easily trickle down to EA stock, which benefits from the aforementioned exclusive licensing.
Moreover, we just got a taste of how hungry consumers are for anything NFL-related. In April, the NFL conducted its draft for the first time remotely. To say the least, it was bizarre. But it brought in an audience of 15.6 million, easily exceeding the last record (set in 2014) of 12.4 million.
If fans are willing to put up with awkward teleconferencing-style broadcasts, this proves how resilient demand is for football. Therefore, I wouldn’t fear holding the bag on EA stock. Indeed, this narrative is getting more exciting by the day.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
