1 best stock of games to consider buying right now
If you are planning to invest in gaming stocks in 2022, there is no shortage of competitors. In this segment of Backstage Pass, registered on December 14thFool.com contributors Demitri Kalogeropoulos, Asit Sharma and Rachel Warren discuss a leading gambling stock that investors can buy and hold for the long term.
Demitri Kalogeropoulos: Quickly, my company is Electronic arts (NASDAQ: EA). EA is the stock symbol. As you probably know, he’s one of the biggest video game developers out there. He owns dozens of really huge global brands.
Some of their bigger ones are EA Sports, which is their separate franchise, but they own the FIFA football franchise, Madden NFL, and they have dozens of other successful franchises, of which Apex Legends is one of their biggest. Recent launches, this free-to-play Battle Royale video game franchise that has so much engagement right now, has captivated so many people.
I just want to throw in some engagement numbers when we talk about the virtual universe and the people who spend time in it. EA has 500 million engaged users in its last count. This has obviously had a big impact on the pandemic and the growth has slowed down a bit, but it continues to grow from that huge number a year ago. Listen to this. This is from their recent conference call.
People spend over 130 million hours watching Apex Legends live content on Twitch, the gaming service that lets you watch players play live. 130 million hours in the last quarter. Obviously, that’s a really huge engagement number.
They loved it. Another reason I love EA, I love the video game industry. Activision Snow storm is the only one I own in this space. But I love all of these companies because video games are becoming more and more valuable to franchises, have much longer lifecycles than before. It’s not a year. Activision has several titles that they released four or five years ago that still have huge engagement levels as they keep releasing content.
It’s more like our service now. People sign up for these games in a subscription model rather than just paying for one. It has a lot of things that you love about software as a service in terms of what it does for cash flow and profitability. Companies like EA have already shown that they can monetize this content very well.
Finally, another great reason to watch EA right now is that, as you may have heard, Activision Blizzard has stumbled in a number of ways over the past year, so they’ve got a bit of a management shake-up. . They have workplace safety issues and things like that that they’re trying to fix and they had to delay two really big games in 2022 which is really unusual for the industry leader to do.
In the meantime, EA has said our pipeline is fully set for 2022. We have all of our big stuff coming out. It’s interesting that EA may have the opportunity to challenge the leader here for maybe the top spot in a few of these spaces. That we will watch. The stock has also lagged the market this year. It’s just another reason to keep this one on your list.
Asit Sharma: Always intrigued by the game companies that have these franchises that they just seem to be harvesting more and more or getting more out of each year. I shouldn’t even say that. The revenue growth is quite impressive.
We have to give symbols, I forgot. Etsy, ETSY, Electronic Arts, EA, correct, Demitri on that one?
Demitri Kalogeropoulos: It’s true.
Asit Sharma: Marvellous. Got an idea, Rachel, and do we move on to mine? Go ahead.
Rachel Warren: Yeah. A few quick thoughts. The gaming industry is one that I have experienced more recently, but I do not invest in stocks in this area yet.
But I was curious how Activision Blizzard is such a big competitor to EA. Obviously, Activision Blizzard has had its fair share of problems this year. I was curious, what market share does Electronic Arts have?
Apparently the most recent stats show that it has a 27% market share of the gaming industry compared to Activision Blizzard which is around 31% so slowly until that.
And in the mobile gaming industry, things have slowed down a bit from their pandemic highs. But the mobile gaming industry, according to GlobalData, is still on track to be a $ 272 billion industry by 2030. Certainly a lot of opportunity in that space.
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