11 Best Esports Stocks to Buy Now
In this article, we discuss the 11 best esports stocks to buy now. To skip the detailed analysis of the esports and video gaming industry, go directly to the 5 Best Esports Stocks to Buy Now.
Esports is growing at a fast pace and is one of the industries that has made millionaires out of young people. For example, Illya Mulyarchuk, nicknamed Yatoro, is a 20-year-old DOTA 2 (multiplayer online battle arena video game) player who managed to grab nearly $3.7 million at the age of 18 from a single event in 2021. The massive prize pools are a testament to the rapid development of this young industry.
In 2023, Singapore became the first country to host Olympic Esports Week. In an interview with CNBC in June 2023, Singapore’s minister of state for culture, community, and youth, Alvin Tan, said that they are optimistic about the growth opportunities in the industry. The minister added that the event is a “pathfinder” in terms of revenue generation and revealed that the esports audience has reached over half a billion people. He further commented that South East Asia is the fastest-growing esports region. According to a market analysis report by Research and Markets, the global esports market was valued at around $2.56 billion in 2022. The market is expected to grow at a compound annual growth rate of 21.9% between 2023 and 2030 and reach $12.5 billion by the end of the forecasted period.
The expansion of the industry is sustained by a significant increase in broadcasting rights, technological innovations, and an increase in the global gaming audience. Nevertheless, the industry is still new and is in its adjustment period. Since 2022, there has been a decline in investments and sponsorship deals in the industry. On January 23, Reuters cited Newzoo’s report and said that the global gaming market declined by 4.3% in 2022. Nevertheless, it grew 0.6% in 2023 and is expected to grow by 2.8% to $189.3 billion in 2024.
The industry experienced the most significant growth during the COVID-19 pandemic. VanEck Video Gaming and eSports ETF (ESPO) gained over 100% between February 2020 and 2021. While the esports industry has been facing some challenges since 2022, the companies are still performing well as the ETF has gained over 33.89% in the last twelve months, as of March 8, compared to the S&P 500’s 8% gain.
Prominent Names in the Industry
As mentioned, the esports industry is quite young. However, it has managed to grab the attention of some big names in the US market. Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc. (NASDAQ:GOOG) are some companies that are deeply involved in the industry as their subsidiaries, Twitch and YouTube (respectively), hold the broadcasting rights for some of the biggest esports events in the world. In addition, Intel Corporation (NASDAQ:INTC) has served as a sponsor and hardware supplier for esports events, and NVIDIA Corporation (NASDAQ:NVDA) has made significant contributions with its cutting-edge graphics processing technology.
Tencent Holdings Limited (OTCMKTS:TCEHY) is another big name in the industry. Its US-based subsidiary, Riot Games, produced League of Legends (LoL), which was the most-viewed esports game in the world in 2023, according to Esports Insider. According to John Needham, Riot’s president of esports, their major LoL events, such as the Mid-Season Invitational (MSI) and Worlds, saw significant growth in Average Minute Audience (AMA) in 2023. MSI saw an AMA increase of 58% year-over-year (YoY), while Worlds’ AMA was up by 65%. The parent company, Tencent Holdings Limited (OTCMKTS:TCEHY), is also working on expanding its video gaming business further. On March 14, Reuters reported that the company acquired two new video game units from TikTok’s parent company, ByteDance.
Microsoft Corporation (NASDAQ:MSFT) already covered 60% to 70% of the cloud gaming market and is now one of the biggest names in the video gaming and esports industry after the acquisition of Activision Blizzard (former ticker: ATVI). Here is what the Executive Vice President and CFO of the company, Amy Hood, said about the acquisition in its latest earnings call:
“At a company level, Activision contributed approximately 4 points to revenue growth, was a 2 point drag on adjusted operating income growth, and a negative $0.5 impact to earnings per share. This impact includes $1.1 billion from purchase accounting adjustments, integration and transaction-related costs, such as severance-related charges related to last week's announcement.”
Hood further added:
“Company gross margin dollars increased 20% and 18% in constant-currency and gross margin percentage increased year-over-year to 68%. Excluding the impact of the change in accounting estimate, gross margin percentage increased roughly 2 points, even with the impact of $581 million from purchase accounting adjustments, integration, and transaction-related costs from the Activision acquisition. Growth was driven by improvement in devices, as well as the improvement in Azure and Office 365 as just mentioned.
Operating expenses increased 3% with 11 points from the Activision acquisition, partially offset by 7 points of favorable impact from the prior year Q2 charge. The Activision impact includes $550 million from purchase accounting adjustments, integration, and transaction-related cost.”
On March 1, TheFly reported that Microsoft Corporation (NASDAQ:MSFT) is partnering with GPU hardware vendors, including NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Intel Corporation (NASDAQ:INTC), for a new API called DirectSR. The API would be used for the integration of Super Resolution into the next generation of PC video games.
Keeping all of the information mentioned above in mind, some of the best esports stocks to buy now include Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD). You can also check out Top 55 Video Games Of All Time: 2024 Rankings and 15 Best Video Games Coming Out in 2024.
11 Best Esports Stocks to Buy Now
Our Methodology
For this article, we identified the stocks from video games-related ETFs such as VanEck Video Gaming and eSports ETF (ESPO), Global X Video Games & Esports ETF (HERO), First Trust S-Network Streaming & Gaming ETF (BNGE), and BetaShares Video Games and Esports ETF (GAME), in addition to Yahoo Finance stock screener and multiple internet rankings of esports stocks. Next, we checked each company’s operations related to e-sports. We compiled an initial list of 20 possible candidates and then narrowed down our selection to the 11 most widely held by institutional investors. Below is the list of the best esports stocks to buy now according to hedge funds, ranked in ascending order of the number of hedge funds that have stakes in them as of Q4 2023.
The hedge fund data was taken from Insider Monkey’s database of 933 elite hedge funds. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11 Best Esports Stocks to Buy Now
11. Inspired Entertainment, Inc. (NASDAQ:INSE)
Number of Hedge Fund Holders: 21
Inspired Entertainment, Inc. (NASDAQ:INSE) is a gaming tech company that provides its products and services through various segments, including Gaming, Virtual Sports, Interactive, and Leisure.
Inspired Entertainment, Inc. (NASDAQ:INSE) was part of 21 hedge funds’ portfolios in the fourth quarter of 2023 with a total stake value of $94.165 million. Andrew N. Wiener’s Samjo Capital is the biggest shareholder in the stock and has a position worth $22.354 million as of Q4 2023.
On February 7, Inspired Entertainment, Inc. (NASDAQ:INSE) announced that it expanded its partnership network by entering into an agreement with Kambi Group for the integration of Inspired Virtual Sports products into the latter’s sportsbook platform.
On January 11, Truist lowered the price target on Inspired Entertainment, Inc.'s (NASDAQ:INSE) stock to $13 from $19 and maintained a Buy rating on the shares.
Inspired Entertainment, Inc. (NASDAQ:INSE) is one of the best esports stocks to buy now, along with Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
10. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 21
Sony Group Corporation (NYSE:SONY) is a Japanese conglomerate company that is a notable name in the esports industry. The company hosts its PlayStation tournaments, owns the Evolution Championship Series (Evo) fighting game tournament, and more.
On February 14, Sony Group Corporation (NYSE:SONY) reported its Q3 GAAP EPS of ￥294.82 (￥1 = US$0.0068 as of March 8) and revenue of ￥3747.5 billion, which increased 21.7% YoY.
According to Insider Monkey’s database that tracks 933 elite hedge funds, the number of hedge funds in Q4 was the same as that of Q3’s in Sony Group Corporation (NYSE:SONY), i.e. 21, but the total stake value increased to $952.952 million in the fourth quarter, compared to $784.527 million in Q3. Ken Fisher’s Fisher Asset Management has increased its stake by 6% and owns 6.36 million company shares worth nearly $602.150 million, as of the fourth quarter.
Over the past three months, Sony Group Corporation (NYSE:SONY) has received Buy ratings from 2 Wall Street analysts. The average price target of $107.50 has an upside of 33.89% as of March 8.
9. Genius Sports Limited (NYSE:GENI)
Number of Hedge Fund Holders: 31
Genius Sports Limited (NYSE:GENI) is a UK-based company that offers data management, video streaming, and integrity services to its clients, including sports leagues, bookmakers, and media companies. Genius Sports Limited (NYSE:GENI) is the 8th best esports stock to buy now.
In the past three months, Genius Sports Limited (NYSE:GENI) has received Buy ratings from 8 Wall Street analysts. As of March 8, the average price target of $8.92 has an upside of 49.66% from current levels.
31 hedge funds had investments in Genius Sports Limited’s (NYSE:GENI) stock worth $207.640 million in Q4. Catherine D. Wood’s ARK Investment Management has increased its stake in the company by 10% to 6.9 million shares worth $42.73 million and is the most significant shareholder, as of the fourth quarter.
8. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 36
NetEase, Inc. (NASDAQ:NTES) is a Chinese tech company that offers and develops video games of various genres under its online games division, NetEase Games.
On February 29, NetEase, Inc. (NASDAQ:NTES) released its FY2023 earnings result with net revenues of RMB 103.5 billion (RMB 1= 0.14 USD as of March 8), compared to RMB 96.5 billion in the previous year. In the fiscal year 2023, the net income attributable to shareholders was RMB29.4 billion, compared to RMB20.3 billion in the prior year.
In the fourth quarter, hedge fund sentiment was positive toward NetEase, Inc.’s (NASDAQ:NTES) stock, as 36 hedge funds held investments worth $1.341 billion. This is compared to 25 funds in the third quarter, with positions worth $1.035 billion. Larry Chen And Terry Zhang’s Tairen Capital is the largest shareholder in the company, with 1.76 million company shares worth $164.307 million, as of Q4 2023.
7. Electronic Arts Inc. (NASDAQ:EA)
Number of Hedge Fund Holders: 42
Electronic Arts Inc. (NASDAQ:EA) is a California-based company that is involved in competitive sports video games through its division, EA Sports.
The company takes the 7th spot on our list of best esports stocks. In Q4, 42 hedge funds held positions in the stock, and their total stakes amounted to $1 billion. As of the fourth quarter of 2023, D E Shaw is the top shareholder in the company. The firm has increased its stake in the company by 177% to 1.124 million shares worth $153.82 million.
On January 31, Electronic Arts Inc. (NASDAQ:EA) declared a quarterly dividend of $0.19, payable by March 20 to the shareholders of record on February 28. As of March 8, the stock’s dividend yield is 0.56%.
On January 30, Electronic Arts Inc. (NASDAQ:EA) released its Q3 GAAP EPS of $1.07, which surpassed the estimates by $0.19. The bookings in the quarter jumped 1.3% YoY to $2.37 billion.
6. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 50
Roblox Corporation (NYSE:RBLX) is a California-based gaming platform that offers its users various types of gaming experiences, including virtual, racing, and other games.
On February 7, Roblox Corporation (NYSE:RBLX) reported its Q4 GAAP EPS of -$0.52, which beat the analysts’ estimates by $0.03. The bookings of $1.13 billion climbed 25.6% year-over-year (YoY) and topped the estimates by $50 million.
According to Insider Monkey’s database that tracks 933 elite hedge funds, hedge fund sentiment was positive toward Roblox Corporation (NYSE:RBLX) in Q4 2023. The stock was part of 50 funds’ portfolios, and the total stake value was $2.94 billion in the fourth quarter, compared to 34 funds in the previous quarter with a total stake of $1.3 billion. With 11.9 million shares worth $544.350 million, Catherine D. Wood’s ARK Investment Management is the most prominent shareholder in the company, as of December 31, 2023.
Roblox Corporation (NYSE:RBLX) was covered by 20 Wall Street analysts over the last three months, and 13 kept a Buy rating on the stock. The average price target of $49.79 represents an upside of 24.66% from current levels, as of March 8.
Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD) are some of the best esports stocks to buy now, in addition to Roblox Corporation (NYSE:RBLX).
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Disclosure. None. 11 Best Esports Stocks to Buy Now is originally published on Insider Monkey.