Thanks to the continued remote lifestyle, the esports industry has been gaining popularity with substantial increases in its user base. In addition, the efforts of e-sports companies to expand audiences by…
hosting live gameplay have helped fuel the growth of the esports market.
The global esports market is expected to reach $1,860.2 million by 2026, registering a 15.1% CAGR from 2021. Furthermore, Insider Intelligence estimates that monthly esports viewers will be around 26.6 million in the United States this year. Given this backdrop, we think it could be wise to scoop up shares of famous players in this space Activision Blizzard, Inc. (ATVI – Get Rating) and Electronic Arts Inc. (EA – Get Rating), because they have robust growth potential.
However, with the rapid rollout of vaccines and easing restrictions, consumer spending is increasingly shifting toward outdoor recreation. So, we think fundamentally weak stocks in this space, Esports Entertainment Group, Inc. (GMBL – Get Rating) and Super League Gaming, Inc. (SLGG – Get Rating), might struggle to advance.
Click here to check out our Video Game Industry Report for 2021
Activision Blizzard, Inc. (ATVI – Get Rating)
ATVI in Santa Monica, Calif., is a video game developer and publisher that operates through three segments: Activision Publishing, Inc.; Blizzard Entertainment, Inc.; and King Digital Entertainment. The company’s legendary franchises include World of WarCraft, Call of Duty, Diablo, Hearthstone, Candy Crush, and Overwatch. It provides innovative, scalable, and valuable games in the world of competitive entertainment.
Last month, the company announced that its “Call of Duty: Vanguard” will launch a new warzone experience with seamless integration on November 5. While multiplayer will feature 20 maps on day one, Zombies fans will witness a signature undead gameplay experience, marking a franchise-first Zombies crossover for Call of Duty.
In July, Hearthstone, one of the ATVI’s franchises, launched the Alliance’s glory in “United in Stormwind.” Alliance’s 135 all-new cards inspired by the rites of passage should allow the company to grow its fan base significantly worldwide.
ATVI’s product sales for the second quarter, ended June 30, 2021, increased 6.6% year-over-year to $568 million. The company’s total net revenues rose 18.8% from its year-ago value to $2.3 billion. Its operating income increased 28% from the prior-year quarter to $959 million. Also, its net income grew 51% year-over-year to $876 million.
Analysts expect ATVI’s revenue for its fiscal year 2022 to be $9.98 billion, representing 13.3% year-over-year growth. The company has an impressive surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. ATVI’s EPS is expected to increase 10.4% in the current year and 14.9% next year. Furthermore, the stock has gained 5.4% in price over the past year.
ATVI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Value, Sentiment, and Quality. We’ve also graded ATVI for Growth, Momentum, and Stability. Click here to access all ATVI’s ratings. ATVI is ranked #6 of 23 stocks in the Entertainment – Toys & Video Games industry.
Electronic Arts Inc. (EA – Get Rating)
EA is a global leader in digital interactive entertainment. The company develops and delivers games, content, and online services for mobile devices, personal computers, and internet-connected consoles. EA games can also be run on PlayStation 5, Xbox Series X, and Nintendo Switch. In addition, the company provides advertising services and licenses its games to third parties. EA is headquartered in Redwood City, Calif.
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