Experts believe that global video game market size has been pegged at USD195.65 billion in 2021, and this market should be able to compound at 12.9% between 2022 – 2030. Growth momentum in technology and strong innovation in both hardware and software should provide the much-needed support to this market over the projected period. Proliferation of smartphones, rise in internet penetration rate along with easy availability of games over the web might act as tailwinds for global gaming stocks market.
Higher preference for online gaming continues to support popularity of massively multiplayer online (MMO), Free2Play (F2P), and multiplayer games. Industry veterans believe that this trend is expected to continue over the forecasted time period. Therefore, game developers still focus on compatibility and efficiency of hardware. Apart from these factors, change in consumer preferences and higher disposable income throughout the globe continue to drive large-scale adoption of advanced gaming consoles. These consoles are equipped with sophisticated features including record & share and cross-platform gameplay.
Developers know that there are individuals using social media to find video game according to their taste and preferences and, as a result, they continue to launch games throughout several genres, such as action, role play, simulation, on social media. This has helped and will continue to attract customers. Increasing popularity of e-sports tournaments and higher number of professional gamers are supporting sales of video games and accessories. Apart from entertainment purposes, potential of gaming as educational tool is gaining momentum too. Developers believe that potential of “cognitive learning” remains unexplored they are capitalising on this opportunity. Despite of the fact that this concept of ‘gaming to learn’ is in its nascent stages, individuals and children are getting inclined to this trend.
The companies operating in this industry mainly focus on development of next-gen video game consoles and engaging content.
To all the investors who are on hunt to select promising gaming stocks, this article has come to your rescue. Let’s explore 2 gaming stocks which are expected to outperform the market over the long-term.
2 Best Gaming Stocks for Good Return
- Electronic Arts Inc.
- Corsair Gaming, Inc.
1. Electronic Arts Inc.
Electronic Arts Inc. has been categorised as one of the world’s largest 3rd party video game publishers. The company has transitioned from console-based video game publisher to one of the largest publishers on consoles, PC, and smartphones. Firm owns several large franchises such as Madden, FIFA, Battlefield, Apex Legends, Mass Effect, etc.
The company has released its preliminary financial results for 1Q ended June 30, 2023 (1Q24). Its 1Q24 results were supported by healthy momentum in EA SPORTS global football and Star Wars Jedi: Survivor. It saw strong start to FY24, with net bookings growing 21% year over year. It saw several new releases, continued live services growth, healthy engagement, and acquisition if new player.
Focus of the company remains on posting long-term growth and profitability. Live services and other net bookings for 1Q came in at $1.177 billion, exhibiting 4% growth year-over-year and accounted for 75% of total net bookings.
In 1Q24, net revenue of the company came in at $1.924 billion, while its net cash provided by operating activities was $359 million and $1.987 billion for trailing twelve months.
For FY24, the company’s net revenue is projected to be ~$7.300 billion – $7.700 billion, while its net income is expected in the range of $947 million to $1.087 billion. Operating cash flow of the company in FY24 is expected between $1.700 billion – $1.850 billion and diluted EPS is projected in the range of $3.42 – $3.92. Finally, net bookings is between $7.300 billion – $7.700 billion. The company has strong development pipeline of new games which should help in stock price growth for the investors.
2. Corsair Gaming, Inc.
The company is in the business of offering high-performance gear for gamers and content creators. Product portfolio of the company consists of Cases, Keyboards, Mice, Headsets, Power Supplies, Gaming Computers, Gaming Chairs, etc.
At the time of announcing its financial results for 2Q23, the company reiterated the financial outlook for FY23. Net revenue of the company came in at $325.4 million in comparison to $283.9 million in 2Q22, exhibiting 14.6% growth year-over-year. Net revenue of gaming components and systems segment was $246.7 million against $194.9 million in 2Q22, while Gamer and creator peripherals segment net revenue was $78.8 million versus $89.0 million in 2Q22.
Adjusted EBITDA of the company came in at $17.8 million in comparison to the loss of $11.0 million in 2Q22.
The company has reached an agreement for the acquisition of certain assets from Drop, which is a leading privately-held peripheral developer and is known for customizable mechanical keyboards and switches.
The Goldman Sachs Group initiated the coverage on the shares of Corsair Gaming, Inc. on April 16th, and they gave a “Neutral” rating with the price target of $20.00. Stifel Nicolaus upped their target price on the shares of the company from $18.00 to $19.00 in a research report dated May 11th.
For FY23, the company projects an improvement in its adjusted EBITDA. This is expected to be supported by margin improvement, normalisation of shipping costs, and tight operating expense controls. Net revenue of the company is expected to be between $1.35 billion to $1.55 billion.