In this article, we will take a look at the 10 best mobile gaming stocks to buy now.
In a 2020 report, Morgan Stanley noted that the global gaming industry is going through a transition from consoles to mobile gaming. The report quotes some astounding numbers which show the growth opportunities in the mobile gaming industry. As of 2019, the mobile gaming industry revenue stood at $73 billion, compared to just $19 billion for the music industry. The report said that the wider penetration of smartphones and 5G internet connection is fueling growth in the gaming sector. In 2019 alone consumers spent a whopping $135 billion on video games. Spending on video games is expected to accelerate in the coming years, and mobile games spend will increase at the fastest rate. The report quotes data from IBISWorld and says that spending on mobile games will increase at a CAGR of 7% from 2019 through 2025, much higher than PC and console games.
Morgan Stanley’s report likened the adoption and growth in the mobile gaming industry to that of the smartphone market. What made smartphones popular was the people’s inclination to ditch landlines and desktops and prefer smartphones for daily entertainment and communication needs. Similarly, people prefer to use smartphones for gaming. The report quotes stats from App Annie, which show that as of 2019, mobile gaming was the largest segment in the entertainment sector, accounting for a whopping 45% of the total games market.
Smartphones are taking a major chunk of the gaming market in terms of devices. In 2019 they accounted for about 35% of the total gaming market, compared to just 23% for PCs and 31% for consoles. The Morgan Stanley report at the time estimated that by 2022 this share of smartphones would rise to 41%, while that of consoles was estimated to remain flat and PCs to shrink to 20%.
These trends are motivating major gaming companies to invest heavily in the mobile gaming market.
Last year, Sony revealed plans to enter the mobile gaming sector and acquired a notable mobile games company (we talk more on this later in the article). Recently, it was reported that Microsoft is planning to launch its Xbox mobile gaming store as soon as next year.
All of these factors are making the mobile gaming industry grow rapidly. According to P&S Intelligence, market size of the total mobile gaming industry by 2021 stood at $93,163.8 million, and this figure is expected to reach a whopping $261,586.3 million in 2030. This would show a CAGR of 12.2%.
The report also identified the adoption of smartphones across the globe as one of the biggest factors of this growth. Some other themes which are trending in the mobile gaming market according to P&S Intelligence are Cloud-based mobile gaming, e-sports and social media-based games.
Another report by Sensor Tower shows some excellent data points of mobile gaming growth based on regions. Asia stands out with its explosive growth. According to the report, mobile gaming revenue in Asia crossed a whopping $12 billion for the first time in the first quarter of 2021. This was an astounding 21% YoY growth. However, the US remains the biggest market for mobile gaming. In the first quarter of 2021, consumer spending on mobile games in the US crossed the $6 billion mark for the second time. Mobile gaming revenue in the US more than doubled since the start of 2018. This growth rate was more than the rest of the world.
Copyright: olegdoroshin / 123RF Stock Photo
Our Methodology
For this article, we scoured the gaming industry and shortlisted all notable small and large companies that make mobile games and operate mobile gaming platforms and technologies. We then picked 10 mobile gaming companies with the highest number of hedge fund investors. We gauged hedge fund sentiment around stocks using Insider Monkey’s proprietary database of 943 hedge funds.
Best Mobile Gaming Stocks to Buy Now
10. Skillz Inc. (NYSE:SKLZ)
Number of Hedge Fund Holders: 10
Skillz Inc. (NYSE:SKLZ) is known for its mobile gaming and esports platform where game developers can host their games and people can participate in tournaments and win prizes.
In March, Skillz Inc. (NYSE:SKLZ) posted its Q4 results. GAAP EPS in the quarter came in at -$0.34 missing estimates by $0.22. Revenue in the period fell 56.7% year over year to $46.87 million. Skillz Inc. (NYSE:SKLZ) had paying monthly active users of 235,000.
As of the end of the fourth quarter of 2022, 10 hedge funds tracked by Insider Monkey had stakes in Skillz Inc. (NYSE:SKLZ). The total worth of these stakes was over $18 million. The most notable hedge funds having stakes in Skillz Inc. (NYSE:SKLZ) are Leonard A. Potter’s Wildcat Capital Management, D E Shaw and Cliff Asness’s AQR Capital Management.
9. Playtika Holding Corp. (NASDAQ:PLTK)
Number of Hedge Fund Holders: 21
Israel-based Playtika Holding Corp. (NASDAQ:PLTK) makes casino and slot games for mobile. In 2023 Playtika Holding Corp. (NASDAQ:PLTK) has gained about 28% through April 14. However, Playtika Holding Corp. (NASDAQ:PLTK) fell sharply on April 13 after BofA downgraded the stock. Another reason behind the decline was an insider sale where a 10% stakeholder of Playtika Holding Corp. (NASDAQ:PLTK) sold about 300,000 shares of the company.
As of the end of the fourth quarter of 2022, 21 hedge funds out of the 943 hedge funds tracked by Insider Monkey had stakes in Playtika Holding Corp. (NASDAQ:PLTK). The total worth of these hedge fund stakes was $134 million. The biggest hedge fund stakeholder of Playtika Holding Corp. (NASDAQ:PLTK) is Cliff Asness’ AQR Capital Management which owns a $55.4 million stake in the company.
8. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 23
Unity Software Inc. (NYSE:U) provides gaming engines and software technologies that help game developers to make mobile games. Unity Software Inc. (NYSE:U) says about 70% of the top mobile games are powered by its platform. Some famous such games include Subway Surfers, Crying Suns and Fantasian.
Earlier this month, it was reported that Cathie Wood bought over 200,000 shares of Unity Software Inc. (NYSE:U). As of the end of the fourth quarter of 2022, Cathie Wood already had a $314 million stake in Unity Software Inc. (NYSE:U). Overall, 23 hedge funds tracked by Insider Monkey had stakes in Unity Software Inc. (NYSE:U) as of the end of the fourth quarter of 2022.
7. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 28
Sony Group Corporation (NYSE:SONY) is strengthening its footprint in the mobile gaming industry. Last year, Sony Group Corporation (NYSE:SONY) announced to acquire Savage Game Studios which will come under PlayStation Studios Mobile Division.
In February, Sony Group Corporation (NYSE:SONY) posted its fiscal Q3 results, according to which revenue of the company increased 12.5% year over year in the period.
As of the end of the fourth quarter of 2022, 28 hedge funds tracked by Insider Monkey had stakes in Sony Group Corporation (NYSE:SONY). The total value of these stakes was $865 million. The biggest hedge fund stakeholder of Sony Group Corporation (NYSE:SONY) is Mario Gabelli’s GAMCO Investors which owns a $124 million stake in the company. The second biggest stakeholder of Sony Group Corporation (NYSE:SONY) according to our database is Anomaly Capital Management of Ben Jacobs with an $104 million stake.
Aristotle Capital made the following comment about Sony Group Corporation (NYSE:SONY) in its Q3 2022 investor letter:
“Sony Group Corporation (NYSE:SONY), the global provider of video games and consoles, image sensors, and music, as well as movies, was a major detractor for the period. The share price of the company has struggled this year following its strong performance in 2021. Signs of a slowdown in the gaming industry (as people seem inclined to take on outdoor activities as pandemic fears have subsided), combined with sales of its PlayStation 5 that have been held up by a global parts shortage, have led to gaming‐related software sales falling more than 20% year‐over‐year. Rather than focusing on short‐term demand dislocations, we focus on the company’s ability to continue migrating videogame users toward the firm’s subscription offerings, as well as its capacity to leverage content across its video, music and gaming platforms. We are also impressed with the expansion of Sony’s Music segment, which has been supported by the pervasiveness of streaming services. Management’s ongoing work to improve the company’s TV and film studios is bearing fruit as well, with sales growing 67% year‐over‐year for its Pictures segment as its regional strategy has taken hold, including recent progress made toward solidifying a merger plan with India‐based Zee Entertainment. All of this is to say we remain excited by the oligopolistic nature of the businesses Sony operates in, and the future prospects for the company given its leadership in image sensors, music publishing and gaming consoles.”
6. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 29
Roblox Corporation (NYSE:RBLX) is a highly popular gaming platform where people can make their own games and play games made by other people. Jefferies analyst Andrew Uerkwitz recently upgraded Roblox Corporation (NYSE:RBLX) to Buy from Hold and upped his price target to $48. Uerkwitz thinks Roblox Corporation (NYSE:RBLX) is “one of the best internet companies” due to its rapid growth. The analyst likened the platform to TikTok. The analyst said that Roblox Corporation (NYSE:RBLX)’s revenue is growing and its user metrics remain strong. The analyst also said Roblox Corporation (NYSE:RBLX)’s margins are at an “inflection point.”
As of the end of the last quarter of 2022, 29 hedge funds tracked by Insider Monkey reported owning stakes in Roblox Corporation (NYSE:RBLX). This was a sharp decline from 38 hedge fund investors at the end of the previous quarter. The biggest hedge fund stakeholder of Roblox Corporation (NYSE:RBLX) as of December 2022 is Catherine D. Wood’s ARK Investment Management which owns a $241 million stake in the company.
SaltLight Capital Management made the following comment about Roblox Corporation (NYSE:RBLX) in its Q4 2022 investor letter:
“We’ve used this incremental capital strategy with some of our ‘early-stage’ investments such as Roblox Corporation (NYSE:RBLX), Purple Group, Transaction Capital and Karooooo (Cartrack).
Today, we would like to discuss one of our early-stage investments, Roblox Corporation (NYSE:RBLX). While there is a risk that we may be premature, mistaken, or even wrong in our evaluation of this opportunity, we see Roblox Corporation (NYSE:RBLX) as a company with the potential to ‘matter’.
Roblox is a 3D real-time content platform that bridges consumers and creators. Instead of being a conventional gaming product, Roblox acts as a tool provider that democratises the creation of 3D real-time user-generated content (UGC)…” (Click here to read the full text)
5. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 31
On March 1, NetEase, Inc. (NASDAQ:NTES) jumped after JPMorgan upgraded NTES to Overweight to Neutral. The firm is bullish on the stock based on the upcoming game launches.
JPMorgan’s analyst Daniel Chen noted NetEase, Inc. (NASDAQ:NTES) is slated to launch nine games this year, starting from Westward Journey Returns.
The analyst also expects NetEase, Inc. (NASDAQ:NTES)’s revenue growth to increase from 1% in the fourth quarter to 8% and 9% in the second and third quarters, respectively, on a year-over-year basis.
NetEase, Inc. (NASDAQ:NTES) saw a sharp rise in hedge fund sentiment during the fourth quarter. A total of 31 hedge funds tracked by Insider Monkey entered the first quarter of 2023 with NetEase, Inc. (NASDAQ:NTES) in their portfolios, compared to 24 hedge fund investors which had stakes in the company at the end of the third quarter of 2022.
4. Electronic Arts Inc (NASDAQ:EA)
Number of Hedge Fund Holders: 46
Electronic Arts is a giant in the mobile gaming space, with some of the most popular games under its belt, including FIFA, NBA Live Mobile Basketball, F1 Mobile Racing, Real Racing 3, Apex Legends Mobile, among many others. Electronic Arts recently said it will reduce its workforce by 6% as the company’s board approved a restructuring plan.
In January, the company posted its fiscal third quarter results. GAAP EPS in the period came in at $0.73, beating estimates by $0.23.
As of the end of the last quarter of 2022, 46 hedge funds tracked by Insider Monkey had stakes in the company. The most significant shareholder of the company is Cliff Asness’ AQR Capital Management which owns an $85 million stake in the company.
3. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 53
Ranking 3rd in our list of the best mobile gaming stocks is Take-Two Interactive Software, Inc. (NASDAQ:TTWO), the company behind famous games like Grand Theft Auto and WWE.
Earlier this month, Bank of America upped its earnings and revenue estimates for Take-Two Interactive Software, Inc. (NASDAQ:TTWO). BofA believes Take-Two Interactive Software, Inc. (NASDAQ:TTWO)’s re-accelerating game pipeline is set to “de-risk” expectations for fiscal 2024 guidance. The firm had upgraded Take-Two Interactive Software, Inc. (NASDAQ:TTWO) to Buy back in November 2022.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) also recently agreed to sell $1 billion aggregate principal amount of its Senior Notes in an underwritten public offering.
Out of the 943 hedge funds tracked by Insider Monkey, 53 hedge funds reported owning stakes in Take-Two Interactive Software, Inc. (NASDAQ:TTWO) as of the end of the fourth quarter of 2022. The total worth of these stakes was $1.7 billion. The biggest hedge fund stakeholder of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) was Steve Cohen’s Point72 Asset Management which owns a $297 million stake in the company.
Diamond Hill All Cap Select Strategy made the following comment about Take-Two Interactive Software, Inc. (NASDAQ:TTWO) in its Q4 2022 investor letter:
“Video game developer Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has faced weakness in the mobile gaming market, in addition to game-launching delays. The company reported underwhelming quarterly results in Q4 and lowered its full-year guidance. After reexamining our long-term thesis, we decided to exit our position in favor of more attractive opportunities.”
2. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 60
Entertainment giant Warner Bros. Discovery, Inc. (NASDAQ:WBD) has several famous mobile games under its belt.
Warner Bros. Discovery, Inc. (NASDAQ:WBD) is having a remarkable year, having gained about 46% in the period through April 14.
Recently, Truist started covering Warner Bros. Discovery, Inc. (NASDAQ:WBD) with a Buy rating and a $19 price target. The firm’s analyst Matthew Thornton said Warner Bros. Discovery, Inc. (NASDAQ:WBD)’s HBO Max relaunch should “drive renewed subscriber and [average revenue per user] momentum.”
A total of 60 hedge funds tracked by Insider Monkey had stakes in Warner Bros. Discovery, Inc. (NASDAQ:WBD), up from 61 hedge funds in the previous quarter.
1. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Holders: 129
Activision Blizzard, Inc. (NASDAQ:ATVI)’s second quarter of last year report showed that the company’s mobile gaming division raked in more revenue than the console and PC divisions combined. Activision Blizzard, Inc. (NASDAQ:ATVI) is behind some of the biggest and most famous mobile games in the world, including COD Mobile and Candy Crush.
As of the end of the fourth quarter of 2022, 129 hedge funds tracked by Insider Monkey had stakes in Activision Blizzard, Inc. (NASDAQ:ATVI). The biggest stakeholder of Activision Blizzard, Inc. (NASDAQ:ATVI) is Berkshire Hathaway of Warren Buffett with a $4 billion stake.
Broyhill Asset Management made the following comment about Activision Blizzard, Inc. (NASDAQ:ATVI) in its Q4 2022 investor letter:
“Shares of Activision Blizzard, Inc. (NASDAQ:ATVI) gained 14% for the twelve months ending December 2022, but we managed to lose money on our investment, purchasing shares after Microsoft’s announced acquisition. In hindsight, we were too quick to establish our position upon announcement of the deal. What we initially saw as an attractive spread became much more attractive throughout the year. That being said, we’ve learned by experience that passing up fifty cent dollars laying on the street because they may be later mistaken for quarters, usually results in leaving a lot of money on the table. Most of the time, it’s not long before others come to the realization that they were, in fact, dollars all along. While we have to sometimes remind ourselves of this particular market peculiarity, we’ve also learned that the best approach is to pick up some of those fifty cent dollars when you see them, leaving some on the street to be picked up later should they be mistaken for quarters. In the case of Activision, we continued picking up shares on weakness throughout the year.
While seemingly daily headlines concerning the trials and travails of the pending acquisition have captivated investors and driven short-term volatility in the stock, we think consensus has completely overlooked the exceptional fundamentals of the business, which have inflected sharply higher. Activision recently reported fourth-quarter earnings per share of $1.87 or nearly 25% higher than the average analyst estimate of $1.52, which barely budged over the past three months. Performance was largely driven by the company’s flagship Call of Duty franchise, as Modern Warfare II posted record sales for an opening quarter. Management expects full-year revenue growth of “at least high teens,” which will likely be an outlier in a market full of declining estimates (more on this next). Bottom line: while shares have been rangebound, held at the mercy of regulators, we believe our margin of safety has increased during the year as investors appear uninterested or unaware of the company’s increasing long-term intrinsic value.”
You can also take a peek at 10 Most Profitable Small Businesses in 2023 and 10 Best April Dividend Stocks To Buy.
Suggested articles:
- 12 Best WallStreetBets Stocks To Buy Now
- Top 15 Shipbuilding Countries in the World
- 12 Best Dow Stocks to Buy Now
Disclosure: None. 10 Best Mobile Gaming Stocks to Buy Now is originally published on Insider Monkey.
