Gaming is gaining momentum and can reward investors through these top esports stocks
November 21, 2023 Nov 21, 2023, 5:16 pm EST November 21, 2023
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The esports industry is a large market that brings video game lovers and competitive players together. Experts expect the industry to surpass a market size of $11.94 billion by 2030.
Gamers have more platforms and resources to grow large followings. Live streaming allows them to reach out to more fans and command sponsorships. League tournaments can have significant cash prizes and have even resulted in the emergence of many professional esports teams.
Investors see an opportunity in this field and are pouring their cash into the industry. These three esports stocks can capitalize on the trend and reward long-term investors.
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Microsoft (NASDAQ:MSFT) is a tech conglomerate with a large presence in cloud computing, PCs, social media, and more. The company also has a big gaming presence through the Xbox console and its recent acquisition of Activision Blizzard.
Microsoft has been one of the top stocks in the S&P 500 and has gained 58% year-to-date. The stock has soared by 266% over the past five years. Shares currently trade at a 36x P/E and come with a dividend yield a little below 1%.
Microsoft posted double-digit year-over-year revenue and earnings gains in the previous quarter. The company came out of the first quarter of fiscal year 2024 with a 40% net profit margin.
Microsoft isn’t a pure gaming play, but it offers significant portfolio diversification within a single stock. Cloud is the main driver of growth, but revenue from Xbox increased by 13% year-over-year. The company is gaining market share in esports and thriving in other verticals as well.
Nintendo (OTCMKTS:NTDOY, OTCMKTS:NTDOF) has established itself as a top pure-play esports stock. The company has produced many successful games. New games have a wave of support from fans based on previous titles within the same franchise.
Nintendo can tap into more revenue streams by creating movies based on their top games. The company’s success with “The Super Mario Bros Movie” and news of a Zelda movie in the works has excited many fans.
Nintendo’s entry into the movie business can turn it into more of a juggernaut than it already is. Disney (NYSE:DIS) has lost a lot of ground in recent years as iconic brands like Marvel are petering out.
Some of Disney’s individual releases made over $1 billion during the peak of Marvel’s popularity. Nintendo can swoop in with its vast library of content and release billion-dollar film after billion-dollar film. The company has enough content and a large multi-generational fanbase to appease moviegoers for decades if it pursues this opportunity.
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Sony (NYSE:SONY) has released many video games under its popular Playstation consoles. Shares have gained 14% year-to-date and are up by 76% over the past five years.
The success of the PS5 indicates Sony can continue to gain market share and reward investors in the years to come. Gamers cumulatively spent over $2 billion on PS5 consoles. The company broke its previous record by shipping 4.9 million devices in the quarter.
Sony grew its revenue by 8% year-over-year in the second quarter of fiscal year 2023. Net income took a hit, but the company maintained a 7% net profit margin.
Gaming makes up the bulk of the company’s revenue. However, it also has other segments like music, pictures, imaging & sensing solutions and other services.
Sony is a top pick in the esports industry due to the company’s ability to sell out devices and consistently create high-quality games. Streamers, competitive players and casual fans alike will get copies of their favorite games and play on one of the top consoles in the market.
On the date of publication, Marc Guberti did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.