The video game industry is involved in the development, marketing, and sale of video game hardware and software. Top companies include Electronic Arts Inc. (EA) and Nintendo Co. Ltd (NTDOY). The video game industry has performed well during the COVID-19 pandemic as business shutdowns and social-distancing measures have limited peoples’ entertainment options. Because video games can be used in the home, they have become a popular option for many consumers.
Video game stocks, represented by the VanEck Vectors Video Gaming and eSports ETF (ESPO), have dramatically outperformed the broader market. ESPO has provided a total return of 82.6% over the past 12 months, well above the Russell 1000’s total return of 20.7%, as of December 1, 2020. All statistics in the tables below are as of December 1 as well.
Here are the top 3 video game stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Video Game Stocks
These are the video game stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Video Game Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Nintendo Co. Ltd. (NTDOY)||68.84||65.6||17.3|
|Avid Technology Inc. (AVID)||11.88||0.5||27.6|
|Activision Blizzard Inc. (ATVI)||79.93||61.8||28.0|
- Nintendo Co. Ltd.: Nintendo is a Japan-based multinational consumer electronics and video game company. It develops and manufactures portable and console game machines and software, playing cards, and consumer electronics. Its game consoles include Nintendo Wii, Nintendo DS, Nintendo 3DS, and others.
- Avid Technology Inc.: Avid Technology is a developer of software and other systems, including newsroom computer systems, digital audio systems, and digital editing services. For Q3 2020, Avid reported soaring net income along with a 56.1% year-over-year (YOY) increase in operating income, driven by both improved gross margin and reduced operating expenses. The company also saw 73.9% YOY growth to subscription revenue as a result of roughly 27,000 net new subscribers for the quarter.
- Activision Blizzard Inc.: Activision Blizzard is a publisher, developer, and distributor of gaming software and peripheral products. The company has video game offerings across many categories, including action/adventure, racing, role playing, simulation, and strategy. For Q3 2020, Activision Blizzard reported a 52.4% YOY increase in net revenue as net income tripled. The company said that successful major content launches, live operations, and new approaches to engagement in key franchises drove the results.
Fastest Growing Video Game Stocks
These are the video game stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Video Game Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Activision Blizzard Inc. (ATVI)||79.93||61.8||200.0|
|Avid Technology Inc. (AVID)||11.88||0.5||157.1|
|Nintendo Co. Ltd. (NTDOY)||68.84||65.6||137.3|
- Activision Blizzard Inc.: See above for company description.
- Avid Technology Inc.: See above for company description.
- Nintendo Co. Ltd.: See above for company description.
Video Game Stocks with the Most Momentum
These are the video game stocks that had the highest total return over the last 12 months.
|Video Game Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Sea Ltd. (SE)||177.38||87.6||378.9|
|Bilibili Inc. (BILI)||60.82||21.0||252.0|
|Score Media and Gaming Inc. (SCR.TO)||CA$1.48||CA$0.6||108.5|
|VanEck Vectors Video Gaming and eSports ETF (ESPO)||N/A||N/A||82.6|
- Sea Ltd.: Sea is a Singapore-based internet and mobile platform company. It provides online gaming services, manages third-party online marketplaces, and provides various financial services, such as e-wallet and payments services. For Q3 2020, Sea reported a 98.7% increase in total revenue on a net loss of $425.3 million. The net loss was more than double the same quarter a year earlier. Revenue growth was driven by strong gains in the company’s Digital Entertainment and E-commerce segments, though Sea also experienced higher costs across the board compared to a year earlier.
- Bilibili Inc.: Bilibili is a China-based provider of online entertainment services. The company offers a platform offering videos, live broadcasting, mobile games, animation, and comics.
- Score Media and Gaming Inc.: Canada-based Score Media and Gaming provides real-time news, scores, fantasy sports information, and other information about sports. The company serves customers in Canada. In November, Score Media announced support for legislation introduced by the Canadian Federal Government to legalize single-event sports wagering. The company’s theScore Bet service would benefit from this move, as the company predicts a market potential for online gaming in Canada of as much as $5.4 billion in annual gross gaming revenue.