What are the best gaming stocks to watch in 2021?
Gaming has been on the rise in 2020 as more people turn to virtual worlds during national lockdowns. So, we’ve highlighted how to invest in the gaming industry, along with some companies that are leading the way.
Investing in the gaming industry: what you need to know
The gaming industry and all it encompasses is larger than the movie and music industries combined. The rise in recent years of gaming tournaments with huge cash prizes has launched video game players to stardom, as have streaming platforms like Twitch, and video-sharing platforms like YouTube.
Many people now watch games being streamed rather than playing the games themselves, and they donate to their favourite players. This, coupled with lucrative endorsements and sponsorship deals, means that some of the top video game players earn footballers’ wages.
As a result, there’s large scope for continued growth in the gaming industry, and the companies that lead the way stand to gain huge windfalls on the success of their games and products – as well as the streamers that play and promote them.
Gaming stocks can be broadly broken down into three categories. Those are:
- Companies that develop and release games
- Companies that develop gaming software, like graphics cards
- Companies that develop gaming consoles
How to buy or invest in gaming stocks
Buying and investing are similar terms with different meanings. In the context of financial markets, buying will often mean taking a long position with derivatives such as spread bets and CFDs. These let you take a speculative position without owning the asset directly.
When buying, spread bets and CFDs let you benefit from any upward movements in an asset’s price. But, you can also choose to go short and ‘sell’ the underlying asset, in which case you’ll benefit from any downward movements in an asset’s price.
Investing on the other hand, lets you take direct ownership of an asset like a company’s shares. This’ll make you a shareholder, eligible to receive dividends and voting rights – if the company grants them. Investing is most often used by people will a long-term positive outlook on an asset’s direction. But, there are ways to short sell with investing – especially with a short-covering strategy.
How to buy gaming stocks
- Create or log in to your trading account and go to our trading platform
- Decide whether you want to trade spread bets or CFDs
- Search for a stock
- Choose your position size
- Select buy and monitor your trade
How to invest in gaming stocks
- Create or log in to your share dealing account and go to our trading platform
- Search for a market
- Select ‘buy’ in the deal ticket to open your investment position
- Choose the number of shares you want to buy
- Confirm your purchase and monitor your investment
Top 5 gaming stocks
The below gaming stocks have been ranked in no particular order, and the list includes companies from all three categories mentioned earlier.
Activision Blizzard Inc
Activision Blizzard Inc is a Californian video games company. Its titles include household names like Call of Duty, Crash Bandicoot, Spyro, World of Warcraft and Candy Crush. It’s the popularity of these titles that give the company such a huge foothold in the gaming industry, and they’re why its included here as one of the top gaming stocks to watch.
For example, it owns the fastest-selling PC game of all time, World of Warcraft: Shadowlands – which sold 3.7 million copies on its first day of release.
That said, the company has been dogged by allegations of wage disparities in recent years. According to an internal survey conducted by Activision Blizzard Inc in 2019, top executives received millions while over half of the company’s other employees were unhappy with their pay.
Nvidia is a graphics processing unit (GPU) manufacturer, and it produces some of the best graphics chips available on the market. Its products are known for their high-performance capabilities and specs, and many high-end gaming computers will use a Nvidia GPU.
Aside from GPUs, the company also produces system-on-a-chip units (SoCs). These are used in mobile phones, as well as in cars. Further, Nvidia is big in the supercomputer scene, and it spent $40 million on its Cambridge-1 model, which will be the UK’s most powerful computer once it is completed. It’s intended to be used by UK healthcare researchers and the NHS.
Nvidia is listed on the Nasdaq under the NVDA ticker and it’s a component of the Nasdaq 100, S&P 100 and S&P 500 stock indices.
Nintendo is one of the best-known gaming companies in the world. Its titles include staple childhood franchises like Mario, Donkey Kong, Animal Crossing, Pokémon and Smash Bros. As well as its games, Nintendo boasts a strong pedigree of consoles like the Wii, the Game Boy, the Nintendo DS and the Nintendo Switch.
Before the release of these home consoles, Nintendo produced many of the arcade cabinets that rose to popularity in the 70s, 80s and 90s.
Perhaps the most well-known of Nintendo’s recent consoles is the handheld Nintendo Switch – which was partly responsible for a 75% increase in revenue for 2020 compared to the previous fiscal year (results announced in May 2020).
The company is listed on the Tokyo Stock Exchange under the 7974 ticker, and it also has listings on the Mexican Stock Exchange (NTDOYN) and the Frankfurt Stock Exchange (NTOA). Nintendo is a component of the TOPIX index.
The Sony Corporation
The Sony Corporation is the parent company of Sony Interactive Entertainment (SIE) – the company behind the popular PlayStation consoles, including the recently launched PlayStation 5.
PlayStations have made SIE is the world’s largest video game console company, and its games have made it the second largest video game publisher. With the release of the PlayStation 5, it’s likely that Sony will be one to watch for 2021 depending on the commercial success of the console and the games that are released for it.
The Sony Corporation is listed on the Tokyo Stock Exchange under the 6758 ticker, as well as the New York Stock Exchange under the SNE ticker. The company is a component of the Nikkei 225 and TOPIX stock indices.
EA – or Electronic Arts – is a video game company. Its titles include Battlefield, The Sims, Medal of Honor, Need for Speed and Star Wars. The company also has divisions that focus on other genres, like EA Sports. EA Sports is perhaps best known for the FIFA, Madden NFL and NBA franchises. New versions of these games are released every year, updated with the latest team compositions and players.
These games are all playable on Sony’s PlayStation 5, as well as Microsoft’s (MSFT) Xbox consoles. So, he commercial success of video game consoles is tied in part to the success of the games that people can play on them, and vice versa. Some of these games are also available for PC – some of which will feature Nvidia GPUs.
EA is listed on the Nasdaq under the EA ticker, and the company is a component of the Nasdaq 100 and S&P 500 indices.
Want to buy or invest in gaming stocks? Either create a trading or share dealing account to get started today. Alternatively, practise on a demo account to get a feel for the price movements of gaming stocks.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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