3 Fortnite Stocks Cashing In On The Battle Royale Game’s Ridiculous Success

The free-to-play game Fortnite is all anyone in the gaming world is talking about. From its humbler origins as a paid early-access title, it has since engulfed the gaming world, with its player base now pushing 50-million strong in less than a year since the game was released (and only a few months since it went free-to-play).

Perhaps most impressive is that Fortnite has attracted millions of players who weren’t previously gamers at all, as a study released by BTIG estimated that as many as 20% of the game’s players fall under that classification. Thus, rather than simply pulling players away from other games, fears of which had weighed on other gaming stocks like TAKE-TWO INTERACTIVE SOFTWARE, INC Common Stock (NASDAQ:TTWO) earlier this year, Fortnite is also growing the video game industry by leaps and bounds, like few games ever have.

Fortnite’s continued success is no guarantee of course. In the middle of 2016 we covered 5 stocks that were benefiting greatly from Pokemon Go, the augmented reality game that had taken the world by storm. Within weeks of its release, Pokemon Go was being played by nearly 30 million users daily. Fast forward a year and that number had plummeted to just 5 million, as users either grew tired of the game or grew tired of causing accidents, a reported 100,000 of which were caused by the game’s players according to a study last year.

Nonetheless, the success of Fortnite looks far more sustainable. The concept is not nearly as radical as Pokemon Go’s and doesn’t require pesky things like going outside. There’s also limitless gameplay essentially, unlike Pokemon Go, which rabid players eventually mastered and had little of interest left to keep them playing.

While Fortnite’s developer Epic Games is not a public company, several such companies have connections to the game. We’ll take a look at those stocks below.

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Turtle Beach Corp (NASDAQ:HEAR)

Gaming headset maker Turtle Beach Corp (NASDAQ:HEAR) has been far and away the biggest beneficiary of Fortnite’s popularity. Shares of Turtle Beach have gained a remarkable 850% in 2018 thanks to the online game, which requires a lot of verbal communication between players, with Fortnite being credited almost entirely for Turtle Beach’s 110% spike in headset sales in Q1.

It’s anticipated that the tailwinds from the battle royale genre’s massive growth will persist for years, with big game makers like Electronic Arts Inc. (NASDAQ:EA) and Activision Blizzard, Inc. (NASDAQ:ATVI) expected to try and grab a piece of the battle royale pie in the future. That should mean continued growth opportunities for Turtle Beach Corp (NASDAQ:HEAR) as the genre expands and evolves, attracting more headset-bereft gamers to it.

On the next page we’ll look at two other stocks that Fortnite is driving higher.

TENCENT HOLDING/ADR (OTCMKTS:TCEHY)

Unfortunately, $482 billion TENCENT HOLDING/ADR (OTCMKTS:TCEHY) is about as far from a Fortnite pure play as there is because of its massive size. Nonetheless, the Chinese social media and tech giant has one of the strongest connections to the game of any public company, owning more than 40% of Epic Games as well as having the Chinese publishing rights to Fortnite. Tencent plans to blitz that market with an expensive marketing campaign when the game is approved for release in the country, in addition to its ongoing efforts to grow the e-sports scene there.

The further popularizing of the battle royale genre in China will be nothing but good news for Tencent, which also developed the mobile version of PlayerUnknowns Battlegrounds, another popular game in the genre. Tencent is no stranger to capitalizing on gaming trends, having jumped into MOBAs (team-based battle games) at the height of their popularity, taking a large stake in League of Legends-maker Riot Games and developing its own MOBA.

NVIDIA Corporation (NASDAQ:NVDA)

NVIDIA Corporation (NASDAQ:NVDA) is clearly benefiting from the surge of new gamers in need of better GPUs that have been drawn into the industry by Fortnite, as its gaming segment grew revenue by 68% in the first quarter (during which Fortnite’s free-to-play version was released), nearly 3x the revenue growth that its gaming segment had achieved in the prior two quarters.

All told, the huge first-quarter by its gaming segment contributed to NVIDIA crushing first-quarter revenue estimates by more than $300 million and earnings estimates by $0.60 per share. NVIDIA recently launched the 3GB GeForce GTX 1050 graphics card, a lower budget GPU that is perfect for online games like Fortnite, which tend to feature less demanding graphics for the sake of crisp gameplay.

Disclosure: None