Sony Stock: Today’s PlayStation 5 Launch and 2 Other Investing Takeaways

Whether you nabbed a preorder or are anxiously refreshing shopping sites, you know that today is a big day. Sony (NYSE:SNE) is officially launching its next-generation PlayStation 5 console, and gamers around the world are excited. New performance, better graphics, exclusive games. But more importantly for Sony stock, the PS5 launch is a huge catalyst that could handsomely reward investors.

The new PlayStation 5 console from Sony (SNE) is displayed on a laptop screen.
Source: Girts Ragelis / Shutterstock.com

Earlier this week, Microsoft (NASDAQ:MSFT) similarly made headlines with its Xbox Series X and lower-cost Xbox Series S consoles. Now, just two days later, Sony has a chance to wow the world with its own advancements. The main model of the PS5 launches today with a starting price of $499, the same as the Series X. Sony also is unveiling the same PS5 but without a disc drive, and that console comes in at $399.

Welcome, then, to the console wars. For the rest of the holiday shopping season and until new consoles hit the market, Microsoft and Sony will be facing off.

With that in mind, here is what you need to know about the PS5 launch and two other investing takeaways from Sony stock.

Takeaway No. 1: The Coronavirus and PS5 Launch

In many ways, Microsoft and Sony are in the same boat. Both are leading console makers, and both chose this week to release their next-generation consoles. This sets them up to benefit from the holiday shopping season and upcoming shopping holidays like Black Friday and Cyber Monday.

But beyond that, there is also the novel coronavirus catalyst.

As we wrote ahead of the new Xbox launch, the pandemic has really changed the world of video games. Stay-at-home orders. Remote work. Virtual learning. All of a sudden, video games had a larger captive audience than ever before. Games not only offer a way to pass the time, but they offer a form of escape from negative headlines and pandemic worries.

As a result, the gaming business is booming. In the first quarter of 2020, Americans spent $10.86 billion on video games. Then in the month of May, video game sales hit $977 million, up more than 50% year-over-year. This trend is set to continue. Experts predict that 2.7 billion gamers will spend almost $160 billion by the end of 2020. In just a few years, there will be even more gamers and total market spending of $200 billion.

Enter the PS5 launch.

Even before the pandemic, experts were predicting that Sony would ride higher after the launch of its newest console. Why? New consoles excite consumers. They encourage spending. They get shoppers online or in stores, credit card in hand, ready to buy the latest gadgets, games and gear. Just as with the Apple (NASDAQ:AAPL) iPhone upgrade cycle, there is a bit of habit in getting a new console.

The coronavirus accelerated this reality, making the PS5 launch even more exciting for Sony stock.

Takeaway No. 2: Sony Stock Beats Microsoft

With the launch of its Xbox Series X and Xbox Series S consoles, Microsoft took some big steps in the right direction. It rolled out consoles featuring hot new tech capabilities like audio ray-tracing. Microsoft also prepped ahead of the launch, making an acquisition of ZeniMax to round out its game studios.

But simply put, most experts think Sony is still the best bet among gaming stocks.

The Motley Fool writes that Sony should be able to easily maintain its leadership position. One Forbes contributor writes that exclusive games make the PS5 launch way more exciting. And InvestorPlace writer Faizan Farooque highlights that PlayStation consoles sell better. In fact, Sony sold 110 million units of its PlayStation 4 while Microsoft sold just 50 million units of its Xbox One. Further hurting matters? Likely fake videos that show new Xbox Series X consoles smoking.

While investors will have to wait and see how sales shake out, it is easy to see from the new releases why the PS5 launch could be such a big catalyst for Sony stock. Partially thanks to pandemic delays, Microsoft did not roll out any exclusive titles with the Xbox Series X. But things are a bit different for Sony. In fact, four exclusive PS5 games including Demon’s Souls are available on launch day. Additionally, as Farooque highlights, gamers are already excited about The Last of Us 2 and Ghost of Tsushima, two games that debuted earlier in the year.

One more thing: Although the Microsoft acquisition of ZeniMax is promising for the future of Xbox, Sony is making big moves of its own. Earlier in the summer, it spent $250 million to acquire a minority stake in Fortnite maker Epic Games. Stay tuned for exciting collaboration.

Takeaway No. 3: There Is More to the Sony Story

It is clear that, in many ways, Sony stock is the real console wars champion. However, investors can have confidence that Sony is not exclusively a video game play. In fact, it has diverse business operations and has found success down many avenues.

To start, Sony has other entertainment businesses that are quite promising. Thanks to its 2017 acquisition of anime dubbing and streaming service Funimation, it has been in the anime world for a few years. That business looks even better now. At the end of October, rumors broke out that Sony was in talks with AT&T (NYSE:T) to acquire its Crunchyroll streaming service for almost $1 billion. That would give it more of an edge in this competition, and allow it to better rival the likes of Netflix (NASDAQ:NFLX) and Disney (NYSE:DIS) in streaming.

One of its other promising businesses is a world away — finance. As Farooque wrote ahead of the PS5 launch, critics have been hard on Sony stock. The company decided to take its finance arm private in a deal worth $3.7 billion. Critics thought that instead, Sony should spin off this unit and focus more on gaming and entertainment. Well, Sony proved everyone wrong. During the pandemic, the finance unit was one of few that did not suffer.

Still not enough? Investors should know that Sony has its hands in robotics, photography, electronics, electric vehicles, biotechnology and so much more.

The Bottom Line

The PS5 launch marks a big day for Sony stock, but it will also lift a handful of other businesses. Thanks to retail sales, investors can expect Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN), Target (NYSE:TGT), Best Buy (NYSE:BBY) and GameStop (NYSE:GME) to benefit.

As the console wars begin again, give Sony a close look here. The longtime winners promises to continue to impressive console sales, exciting game launches and big growth for shareholders.

On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Sarah Smith is a Web Content Producer for InvestorPlace.com. 


Article printed from InvestorPlace Media, https://investorplace.com/2020/11/sony-stock-todays-playstation-5-launch-and-2-other-investing-takeaways/.

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