3 ways to trade the growth of video games: ATVI, TTWO, HERO


Video game sales were feared to decline after the pandemic. However, this never happened. Instead, sales have only grown.

In September alone, the video game industry saw sales skyrocket to $ 4.36 billion, according to the NPD Group. In addition, in the first half of the year, sales reached up to $ 28.9 billion, or 15% year-over-year growth (YOY). And from the beginning of the year (YTD) until September, sales are up to $ 42.3 billion, or 12% year-on-year growth. So much for the fears of a slowdown.

In addition, for the full year 2021, sales could reach $ 61.7 billion, a 10% increase year-on-year.

Plus, with the holiday shopping season just a few weeks away and new video game releases coming, sales could remain skyrocketing. Just in November we’ll see Battlefield 2042, Call of Duty: Vanguard, Star Wars: Knights of Old Republic and Forza Horizon 5.

I don’t see much in the way of even better sales. That being said, some of the top video game titles to consider include:

  • Activision Blizzard (NASDAQ:ATVI)
  • Take-Two Interactive (NASDAQ:OF THEM)
  • Global X ETF on Video Games and Esports (NASDAQ:HERO)

Now, let’s dive in and take a closer look at each one.

Trending Video Game Stock: Activsion Blizzard (ATVI)

Source: madameF / Shutterstock.com

Since the start of the year, Activision Blizzard has gone from a high of around $ 100 to just under $ 80.

Not helping, the California Department of Fair Employment and Housing filed a complaint against the company for the ill-treatment inflicted on its employees. The company would then settle for about $ 18 million. Such treatment of anyone is reprehensible and disgusting. So I hope the company has learned its lesson – and a dear one.

At the same time, it seems that ATVI has incorporated much of the chaos. After catching back up support in early 2020, the game stock is just starting to pivot higher. From a current price of $ 79.09, I would like to see the ATVI stock test $ 100 again, in the short term. We’ll also get a better idea of ​​where the direction is when the company releases its third quarter results on November 2.

In August, net income jumped to $ 2.3 billion from $ 1.93 billion year-on-year. GAAP earnings per share (EPS) was $ 1.12 versus 75 cents year-on-year. Operating margins improved to 44%. Furthermore, according to Wedbush Securities analyst Michael Pachter, “Activision launched ‘Diablo II: Resurrected’ at the end of the quarter, so they’re probably going to surprise on the upside more than the rest. ‘Candy Crush’ also killed him. Thus, the outlook is good for ATVI stock.

Take-Two Interactive (TTWO)

Take-Two Interactive (TTWO) logo displayed on a smartphone

Source: rafapress / Shutterstock.com

Take-Two Interactive has been hot.

Since hitting a low of around $ 145, the stock has since hit $ 181. As the holidays approach, I would like to see it closer to $ 210. That is, if it can break through the upper triple resistance around $ 187.16 set at the end of May. Not only could the holiday shopping season fuel the hike further, it could also be very popular. Grand Theft Auto V.

The company is set to release another version of the game for the Xbox Series X and Series S consoles, and Sony’s PS5 by March of next year. Coupled with other hot tubes such as NBA 2K and Red Dead Redemption, and you can see why the sales are hot.

We’ll see how hot things could get when Take-Two releases its results on November 3. In its August earnings release, the company reported better-than-expected results. Net income was $ 152.3 million, or $ 1.30 per share, from $ 88.5 million, or 77 cents year-on-year. However, all was not positive. Revenue fell 2% to $ 813.3 million and net bookings fell 29% to $ 711.4 million.

Meanwhile, analysts were looking for EPS of $ 1.08 on orders of $ 684.3 million. Nevertheless, let’s see if the TTWO share can continue its momentum into the new year.

Global X ETF on Video Games and Electronic Sports (HERO)

Metaverse actions: child in front of a computer screen playing video games

Source: Shutterstock

One of my favorite ways to trade any hot sector is with an exchange traded fund (ETF). All because they provide more exposure to industry giants at a much lower cost. At $ 29.85 with an expense ratio of 0.50%, the ETF invests in companies that develop or publish video games, produce computer hardware, or distribute video game and esports content.

Some of his main holdings include NVIDIA Corp. (NASDAQ:NVDA), Electronic arts (NASDAQ:EA), Activision Blizzard, Take-Two Interactive and Netease Inc. (NASDAQ:NTES). If I were to buy 100 shares of the ETF, it would cost me $ 2,985. If I were to buy just 100 shares of NVDA, it would cost me $ 24,830. So not only does the ETF offer more exposure, it does so at a lower cost.

As of the publication date, Ian Cooper does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.

Ian Cooper, a contributor of InvestorPlace.com, analyzes stocks and options for online reviews since 1999.