The video game industry is involved in the development, marketing, and sale of video game hardware and software. Top companies include Electronic Arts Inc. (EA) and Nintendo Co. Ltd. (NTDOY). Video game industry sales generally have performed well during the COVID-19 pandemic as business shutdowns and social-distancing measures have limited peoples' entertainment options. Since video games can be used in the home, they have become a popular option for many consumers. While the fast-spreading Delta variant of the coronavirus remains a threat, the reopening of the economy and relaxation of restrictions will be a test for many video game companies. The big question is whether they will be able to maintain newly-minted gamers as people begin seeking more entertainment options outside the home.
Video game stocks, represented by the VanEck Vectors Video Gaming and eSports ETF (ESPO), soared in the initial phases of the pandemic, rising from mid-March of 2020 through mid-February 2021. But they have underperformed the broader market in the past year. ESPO's total return was 17.0% over the past 12 months versus the Russell 1000's total return of 37.1%. These market performance numbers and all statistics in the tables below are as of Sept. 14, 2021.
Here are the top 3 video game stocks with the best value, the fastest growth, and the most momentum.
These are the video game stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Video Game Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Nintendo Co. Ltd. (NTDOY)||61.26||58.4||13.3|
|SciPlay Corp. (SCPL)||18.95||0.5||22.0|
|Activision Blizzard Inc. (ATVI)||77.84||60.5||23.3|
- Nintendo Co. Ltd.: Nintendo is a Japan-based multinational consumer electronics and video game company. It develops and manufactures portable and console game machines, as well as software, playing cards, and consumer electronics. Its game consoles include Nintendo Wii, Nintendo DS, and Nintendo 3DS.
- SciPlay Corp.: SciPlay is a developer and publisher of digital games for mobile and web platforms. The company offers casino games, such as Jackpot Party Casino and Hot Shot Casino, as well as casual and bingo games, such as MONOPOLY SLOTS and Bingo Showdown. SciPlay announced in early July that it acquired Koukoi Games Oy, a Finland-based developer and operator of casual mobile games. Financial terms of the transaction were not disclosed.
- Activision Blizzard Inc.: Activision Blizzard develops, publishes, and distributes interactive entertainment content and services for video game consoles, personal computers, and mobile devices. Its major titles include the Call of Duty and World of Warcraft franchises. On Sept. 10, the Communications Workers of America union filed a complaint with the U.S. National Labor Relations Board accusing Activision Blizzard of violating federal labor law through the use of coercive rules, actions, and statements. The complaint also alleges that the company interrogated its staff illegally. Activision Blizzard has been a target of scrutiny from U.S. government authorities and dissent from employees over the past several months. The recent union complaint is just the latest development.
These are the top video game stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Video Game Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Avid Technology Inc. (AVID)||25.57||1.2||275.0||19.7|
|Enthusiast Gaming Holdings Inc. (EGLX.TO)||CA$4.90||CA$0.6||N/A (see company description)||427.2|
|Sea Ltd. (SE)||333.55||180.0||N/A (see company description)||158.6|
- Avid Technology Inc.: Avid Technology develops software and integrated solutions for video and audio content creation, management, and distribution. Its platform and set of creative software tools provide content creation solutions for the media and entertainment industry. The company recently announced that its board of directors has authorized a share repurchase program whereby the company may purchase up to $115 million of its common stock. Avid Technology said that the decision to buy back stock as well as the timing of the buybacks will depend on a number of factors, including capital needs, the market price of the company's common stock, general market conditions, and other corporate considerations.
- Enthusiast Gaming Holdings Inc.: Enthusiast Gaming is a Canada-based video game and eSports company. It is focused on developing a social media platform for video game and eSports fans to connect worldwide. The company has made a number of recent acquisitions. On Sept. 2, the company announced that it acquired GameKnot LLC, owner of chess fan community GameKnot.com, for approximately $2.8 million. On Sept. 7, the company announced the acquisition of casual gaming company Addicting Games Inc. for approximately $34.4 million. Because the company reported negative EPS in the most recent quarter, an EPS growth rate could not be calculated for the above table.
- Sea Ltd.: Sea is an internet and mobile platform company. It provides online gaming services, manages third-party online marketplaces, and provides various financial services, such as e-wallet and payments services. Because the company reported negative EPS in the most recent quarter, an EPS growth rate could not be calculated for the above table.
These are the video game stocks that had the highest total return over the last 12 months.
|Video Game Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Avid Technology Inc. (AVID)||25.57||1.2||215.3|
|Enthusiast Gaming Holdings Inc. (EGLX.TO)||CA$4.90||CA$0.6||181.6|
|Sea Ltd. (SE)||333.55||180.0||125.6|
|VanEck Vectors Video Gaming and eSports ETF (ESPO)||N/A||N/A||17.0|
- Avid Technology Inc.: See above for company description.
- Enthusiast Gaming Holdings Inc.: See above for company description.
- Sea Ltd.: See above for company description.
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Bloomberg. "Activision Blizzard’s Labor Woes Grow on Union Complaint to NLRB." Accessed Sept. 15, 2021.
CNN. "Activision Blizzard employees accuse company of unfair labor practices." Accessed Sept. 15, 2021.
Avid Technology Inc. "Avid Technology Announces $115 Million Share Repurchase Authorization." Accessed Sept. 15, 2021.
Enthusiast Gaming Holdings Inc. "Enthusiast Gaming Announces Acquisition of GameKnot." Accessed Sept. 15, 2021.
Enthusiast Gaming Holdings Inc. "Enthusiast Gaming Acquires Addicting Games, Enters Casual Gaming Market." Accessed Sept. 15, 2021.
Enthusiast Gaming Holdings Inc. "Enthusiast Gaming Reports Second Quarter 2021 Results." Accessed Sept. 15, 2021.
Sea Ltd. "Sea Limited Reports Second Quarter 2021 Results," Page 4. Accessed Sept. 15, 2021.