The video game industry has benefited from the COVID lockdowns when people were forced to stay at home and spend their free time gaming. But after the losing streak in 2022, the industry is staging a comeback.
Finbold analyzed on August 28 the best gaming stocks in terms of growth potential and selected the two that came on top.
Electronic Arts (NASDAQ: EA)
Electronic Arts (NASDAQ: EA) is a digital entertainment company that develops, markets, publishes, and delivers video games. Some of the company’s most popular titles include Apex Legends, Battlefield, and The Sims, as well as Star Wars games and football games in the FIFA series.
The company reported its Q1 earnings for FY24, with net bookings of the FIFA game delivering a record Q1 for the franchise. Its quarterly earnings of $1.14 per share beat estimates of $1.01 per share. For comparison, EA had $0.32 earnings per share a year ago.
“EA delivered a record Q1, driven by strong momentum in EA SPORTS global football and Star Wars Jedi: Survivor,” said Andrew Wilson, CEO of EA.
Analysts on TipRanks see a 23% upside for the stock within the next 12 months based on 16 analyst ratings in the past three months.
Activision Blizzard Inc (NASDAQ: ATVI)
Activision Blizzard is a developer and publisher of interactive content and services with a focus on video games. Popular game titles from this company include Call of Duty, Diablo, StarCraft, and the popular mobile game Candy Crush.
Microsoft intended to acquire the company for $95 per share for a total value of $69 billion, but the deal had to be restructured due to regulatory hurdles. Under the restructured transaction, Microsoft will not release Activision Blizzard games exclusively on its own cloud streaming service – Xbox Cloud Gaming – or exclusively control the licensing terms of Activision Blizzard games for rival services. The transaction is expected to close by October 18, 2023.
Even if the deal doesn’t go through, ATVI is a solid gaming stock to own. Its Q2 earnings report showed strong revenue, 34% higher compared to the same period last year, because of increased sales.
Morningstar analyst equity report has given a fair value estimate of $95 per share, 3% above the current market price of $91.66.
Activision Blizzard has outperformed the S&P 500’s 15% return year-to-date with a 19.22% return during the same period, while EA is lagging with a -2.53% return.
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