Video games are big business, and that success has also help drive the case for many video game companies as key esports stocks to buy.
Taking full advantage of the broad popularity in gaming, esports have shifted from niche to mainstream over the years. Popular sports video games such as Madden NFL Football, NBA 2K, FIFA and Tony Hawk’s Pro Skater are powering a global esports market that is forecast to be worth $1.6 billion by 2023, according to market research firm Statista. As celebrities from basketball legend Michael Jordan to rapper Drake endorse esports, and professional gamers, or “esport athletes,” rake in millions of dollars playing in professional tournaments, the esports boom shows no signs of slowing down.
As esports becomes increasingly mainstream and the broadcasting of professional games and tournaments grows, revenue is expected to increase from sponsorships, advertising, media rights, publisher fees, merchandise, tickets and streaming. While China is currently the largest market for esports, the United States isn’t far behind. It all adds up to a lucrative and fast growing opportunity for investors.
Here we look at four esports stocks to buy that will be long-term winners:
- Electronic Arts (NASDAQ:EA)
- Activision Blizzard (NASDAQ:ATVI)
- Take-Two Interactive Software (NASDAQ:TTWO)
- Logitech (NASDAQ:LOGI)
These are companies that should capitalize on the explosive growth in popularity of esports in the coming years.
Esports Stocks to Buy: Electronic Arts (EA)
We begin with one of the leaders and best known brands in esports — Electronic Arts. The Redwood City, California-based company is the second-largest video game developer by revenue in the U.S. after Activision Blizzard. And a good deal of the company’s success is tied up in its wildly successful esports franchises that include the FIFA soccer series and Madden NFL video games. In 2019, more than 45 million video gamers around the world logged in to play FIFA 19.
Its esport games have proven to be so popular that Electronic Arts is now developing a streaming platform for competitive video games that will allow gamers from all over the world to compete against each other using a range of different devices — from an Xbox to a personal computer. As long as the gamer is a subscriber to Electronic Art’s platform, they can get in on the action. Electronic Arts has stated that its ultimate goal is to become the “Netflix of competitive gaming.”
As it builds its competitive gaming platform, Electronic Arts has also entered into a partnership to make more than 60 of its popular console and personal computer games available through Microsoft’s (NASDAQ:MSFT) new Xbox Series X console that debuts later this fall in time for Christmas. Subscribers to “EA Play” on the new Xbox will be able to access the FIFA soccer and Madden NFL titles, as well as other popular Electronic Arts titles, such as The Sims franchise, Titan Fall 2 and Mass Effect. The EA Play subscription service should add another revenue stream for Electronic Arts and help keep its popular esports titles front-and-center with gamers.
Over the past five years, EA stock has more than doubled in price to $125 a share. While the company doesn’t pay a dividend to shareholders, its stock should continue to run higher as Electronic Arts grows with the esports market.
Activision Blizzard (ATVI)
Activision Blizzard is taking the bull by the horns when it comes to esports and professional gaming. The Santa Monica, California company runs the popular “Overwatch League,” which is a professional esports league for the first-person shooter video game Overwatch. The company has reached a deal with Walt Disney (NYSE:DIS) to have Overwatch League matches broadcast on mainstream sports channel ESPN.
If that weren’t impressive enough, Activision Blizzard also runs Major League Gaming, a digital platform for live-streaming esports events around the world, such as the company’s other super popular first-person shooter video game franchise: Call of Duty. Activision Blizzard also publishes the perennial bestselling skateboarding video game: Tony Hawk’s Pro Skater.
Besides pushing professional gaming into the mainstream, Activision Blizzard also has a significant presence in mobile gaming (it owns the Candy Crush franchise) and is releasing a number of new titles for the PlayStation 5 and Xbox Series X consoles. ATVI stock has performed well this year, up 50% from its March low to $78 a share currently. Plus, the company pays a healthy annual dividend of 41 cents per share to its shareholders, representing a yield of 0.53%.
Analysts seem to think that ATVI stock has room to run. The 24 analysts offering 12 month price targets for Activision Blizzard have a median price target is $94.13, suggesting that the share price could rise a further 20% over the coming year. That and all of the details mentioned above make it one of the most promising esports stocks to buy today.
Take-Two Interactive Software (TTWO)
Logitech is not a video game publisher. It is a company that makes all the hardware that esport athletes need to participate in the competitive world of professional gaming. And many of Logitech’s products are considered to be “must-haves” for gamers who rely on the newest and fastest equipment to compete and win in esports. Logitech products include gaming mice, keyboards, high definition monitors, headsets, virtual flight simulators and racing car wheels. This is a company that is sure to cash in as esports grow in popularity and more gamers hunt for Logitech hardware and products.
Co-headquartered in Lausanne, Switzerland and Newark, California, Logitech works hard to ensure that its hardware meets the needs of gamers and is on the cutting edge of the video game industry. For example, the company recently released a new virtual reality gaming headset that’s compatible with the Oculus Quest 2 headset. And, they also issued software updates for two of their more popular gaming mice to make them even more sensitive and responsive to the touch of gamers.
The responsiveness to their customers has kept Logtech ahead of the competition and helped the company thrive. LOGI stock has more than doubled since bottoming during the market crash in March and now trades at $70.47 a share. Several analysts recently upgraded their forecasts on Logitech stock, with the median price target now sitting at $74.74, suggesting 6% upside from the current stock price.
On the date of publication, Joel Baglole held shares of DIS and MSFT.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.