What are the best video games and esports stocks to buy today? In this time of uncertainty characterized by volatile market movements, economic contraction, and spiraling unemployment, finding stocks to put your money into seems like an arduous task. Some investors might think that the stock market is acting irrationally and puzzled by the quick recovery of stock prices sin the end of March. The market’s movements isn’t far away from economic realities. Economic reality is that long-term real interest rates are negative, the Federal Reserve is flooding the market with cheap credit, and the current economic slowdown is temporary.
Investors might wonder how to profit from a business built on audiences watching others play video games. However, the sector has witnessed a big surge in patronage during the Covid-19 coronavirus pandemic as consumers stay at home. That has raised interest in video game stocks and esports companies because they make money through broadcast licensing deals, merchandise, live-event ticket sales, sponsorships, advertising, and other channels.
In order to compile this list of best video games and esports stocks to buy we started with top 10 stocks in the Global X Video Games & Esports ETF (HERO). According to its website this ETF “seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality”.
Savvy investors have used hedge funds as a litmus test to gauge the profitability of stocks and to know the trajectory of market sentiment. Research carried out by Insider Monkey has shown that a select group of hedge fund holdings have consistently outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). As such, hedge fund sentiments are undoubtedly a useful indicator that experienced investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Using hedge fund sentiment data from 800+ hedge funds, we ranked the top 5 video gaming and esports stocks to buy. Here are the best video gaming and esports stocks to buy according to hedge funds:
5. Zynga Inc. (NASDAQ: ZNGA)
Zynga Inc (NASDAQ:ZNGA) develops, markets, and operates social games as live services in the United States and internationally. The company’s games are played on mobile platforms, such as Apple iOS and Google’s Android operating systems, as well as on social networking sites, such as Facebook (NASDAQ:FB) and Snapchat.
The company has a market capitalization of $10.424bn., while the company’s share price has increased by 57.8% this year. In Q1 2020, the number of bullish hedge fund positions on Zynga Inc (NASDAQ: ZNGA) was 59.
As Zynga Inc. (NASDAQ:ZNGA) approaches its next earnings release, on August 5, 2020, analysts are projecting reported earnings of $0.06 per share, which represents a year-over-year change of +250%. Revenues are also expected to be $503.07 million, up 33.7% from the year-ago quarter.
As at March 2020, Iridian Asset Management held the most valuable stake in Zynga Inc (NASDAQ: ZNGA), worth $160.2 million. This is followed by Renaissance Technologies which amassed $117.6 million worth of shares. Cadian Capital, Two Sigma Advisors, and Citadel Investment Group were also very bullish on the stock, becoming one of the largest hedge fund holders of the company. As regards portfolio weights assigned to each position Greenvale Capital allocated the largest weight to Zynga Inc (NASDAQ: ZNGA), which comprises 12.6% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, setting aside 6.69 percent of its 13F equity portfolio to the stock.