Video games remain a scorching hot sector, attracting both big companies and smaller firms that trade as Reddit penny stocks.
Hugely popular before the pandemic, gaming has only grown during the Covid-19 outbreak as people use it to connect and socialize with friends and family. From online and PC games to mobile gaming and next generation consoles released last fall by Microsoft (NASDAQ:MSFT) and Sony (NYSE:SONY), video games have never been bigger than they are today.
The global video game market (games and accessories) was valued at $138.4 billion in 2021, up 162% from a decade earlier. That has some multinational companies such as Microsoft and marquee video game companies such as Activision Blizzard (NASDAQ:ATVI) and Roblox (NYSE:RBLX) cashing in.
But many smaller video game companies whose shares trade in penny stock range (under $5) are also benefiting from the boom in gaming. And they’re drawing increasing attention from the Reddit trading crowd.
Here are four Reddit penny stocks ready to “level up” in video games and esports.
- Super League Gaming (NASDAQ:SLGG)
- Razer (OTCMKTS:RAZFF)
- Allied Esports Entertainment (NASDAQ:AESE)
- RealNetworks (NASDAQ:RNWK)
Reddit Penny Stocks: Super League Gaming (SLGG)
Santa Monica, California-based Super League Gaming saw some nice jumps in its stock price this year. Between late February and mid-March, SLGG stock leapt 265% to a peak of $11.20 a share after Reddit traders targeted the company. The share price has since come back to earth and now trades at $4.16.
Still, year-to-date, Super League Gaming’s stock is up 47%.
A U.S. amateur esports broadcaster, Super League Gaming has been growing at a brisk pace. In 2020, its revenues rose 90%, though it only totaled $2.1 million. Still, the number of registered users on its platform tripled to 2.9 million. While the company remains small, it has lofty ambitions, including a big push into live streaming broadcasts of esports contests and the broadcast of esports highlights.
Razer is a company co-headquartered in Singapore and Irvine, California that makes video game hardware and accessories. The company manufactures popular keyboards, gaming mice, chairs and headsets used by gamers – amateur and professionals – around the world. Razer has been in existence since 1998 and originally focused on making high-end mice for use in PC gaming. It has since evolved to become one of the leading brands in the world when it comes to gaming gear.
Unfortunately, Razer’s strong reputation among gamers isn’t reflected in its share price. RAZFF stock is currently valued at 33 cents a share and trades on the over-the-counter market that is reserved for the lowest of the low penny stocks.
The stock did bounce pretty high in mid-February when the Reddit traders briefly got hold of it, pushing the share price up to a high of 45 cents. Whether the stock will ever crawl out of its current doldrums remains to be seen. But investors on the hunt for an ultra-cheap gaming stock may want to give Razer a look.
Reddit Penny Stocks: Allied Esports Entertainment (AESE)
Also based in Irvine, California, Allied Esports Entertainment is an electronic sports content production company, specializing in live streaming and player connectivity that are essential to esports contests and broadcasts. The company also connects gamers around the world through virtual arenas and an army of esports trucks that it deploys across the U.S.
From the start of this year through mid-March, AESE stock rose 134% and nearly touched $4 a share. It’s down to $2.34 now but is still up 46% on the year.
The share price was above $10 in 2019 but has struggled over the past two years. A good portion of the company’s business, notably the in-person gaming that takes place in the back of its trucks has been shutdown during the pandemic. As the economy reopens and esports continue to grow in popularity, this stock should see better days.
Viewed as a pioneer of Internet streaming and artificial intelligence, Seattle-based RealNetworks today is heavily involved in mobile gaming. Through its GameHouse subsidiary, the company makes a number of addictive mobile games ranging from original adventure titles to traditional card games and Mahjong.
These games have helped to keep RealNetworks buoyant and solvent while other legacy parts of its business have declined over the past 20 years.
RNWK stock is currently worth $2.38 a share. But it rose as much as 324% in mid-March when it was squeezed by Reddit traders, hitting a high of $6.66 a share. It was the biggest move in the stock in four years.
While the Reddit squeeze was short-lived, RealNetworks stock remains up 52% so far in 2021. It will likely take a significant boost in the company’s other business lines, especially its artificial intelligence group, to get the share price out of penny stock territory. Until then, there are those addictive mobile games to entertain investors.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.