Top video game stocks this quarter include NVIDIA Corp., Inspired Entertainment Inc., and SciPlay Corp., all of which have risen more than 25% in the last 12 months, while rising interest rates have weighed on the broader market.
The VanEck Video Gaming and eSports ETF (ESPO), a benchmark for the video game industry, fell more than 3% in the past year, compared with a 6% drop in the Russell 1000 Index.
We look at the top three video game stocks in three categories: the best value, the fastest growth, and the best performance. All data are as of May 2.
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 through 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)||10.32||48.1||13.8|
|Playtika Holding Corp. (PLTK)||10.10||3.7||14.4|
|Inspired Entertainment Inc. (INSE)||12.83||0.3||16.7|
- Nintendo Co. Ltd.: Nintendo is a Japan-based multinational consumer electronics and video game company. It develops and manufactures portable and console game machines as well as software, playing cards, and consumer electronics. It owns some of the world's most recognizable video game franchises, including Super Mario, Pokémon, and Zelda.
- Playtika Holding Corp.: Playtika is an Israel-based company that develops and publishes free-to-play mobile games on a proprietary technology platform.
- Inspired Entertainment Inc.: Inspired Entertainment is a gaming technology company that supplies products such as gaming terminals and software for the gambling industry. Inspired Entertainment reported a net income of $3 million on $79 million in revenue in the fourth quarter last year, swinging from a loss of $1 million the year before.
Fastest Growing Video Game Stocks
These are the top video game stocks ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric is susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 1,000% were excluded as outliers.
|Fastest Growing Video Game Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|SciPlay Corp. (SCPL)||16.86||0.4||256||18|
|Electronic Arts Inc. (EA)||127.42||34.9||217||5|
|Activision Blizzard Inc. (ATVI)||76.00||59.7||86||35|
- SciPlay Corp.: SciPlay is a mobile gaming company that offers games such as Gold Fish Casino, Monopoly Slots, and Bingo Showdown.
- Electronic Arts Inc.: Electronic Arts is a global digital interactive entertainment company. It develops games, content, and online services for consoles, mobile devices, and PCs. In the last three months of 2022, EA's net income nearly tripled on slight revenue growth compared to the previous year. The company also repurchased 2.6 million shares during the quarter.
- Activision Blizzard Inc.: Activision Blizzard is an interactive entertainment company that develops and distributes video games on mobile devices, personal computers, and consoles. It also manages an esports league and an online gaming service. The company reported broad-based growth in the first quarter of 2023, with revenue increasing year-over-year across all operating units and geographies. Xbox-maker Microsoft (MSFT) has offered to acquire Activision for $95 per share. However, American and European antitrust regulators have vowed to block the deal.
Video Game Stocks With the Most Momentum
These are the video game stocks that had the best returns or smallest declines in total return over the past 12 months out of the companies we looked at.
|Video Game Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|NVIDIA Corp. (NVDA)||282.10||697.0||45|
|Inspired Entertainment Inc. (INSE)||12.83||0.3||35|
|SciPlay Corp. (SCPL)||16.86||0.4||27|
|VanEck Video Gaming and eSports ETF (ESPO)||N/A||N/A||1|
- NVIDIA Corp.: NVIDIA is a semiconductor company that derives most of its revenue from selling graphics processing units for gaming PCs. On Feb. 22, the company released its fourth-quarter earnings; net income fell by more than 50%, on a 23% decline in revenue. Nonetheless, NVIDIA stock has risen nearly 50% this year on enthusiasm about the growth prospects of its artificial intelligence business.
- Inspired Entertainment Inc.: See the company description above.
- SciPlay Inc.: See the company description above.
Trends in the Video Game Industry
Video game companies benefited early in the COVID-19 pandemic as many consumers sheltered at home and turned to at-home entertainment. Consumer spending on video games soared to over $60 billion in 2021 from $43 billion in 2019. Sales have declined since then, but developments in AI and virtual reality could make 2023 a memorable year for video game stocks.
Mobile gaming attracts more users than console and PC gaming—with an estimated user base of over 160 million people—and it's expected to grow in the coming years while console and PC gaming lose users. With more gamers playing on their smartphones, spending on advertising within mobile games is expected to grow at an average rate of 8% to 10% over the next few years.
Advantages of Video Game Stocks
Video games remain a growth industry. According to market research firm Grand View Research, the global video game market was over $195 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 12.9% through 2030.
Several factors are likely to contribute to the rapid growth of the industry. For starters, constant technology upgrades provide video game enthusiasts with an improved gaming experience. Also, various new monetization models enable video game companies to devise strategies that encourage consumers to spend money on products after the initial purchase of a game or hardware. The emergence of immersive, metaverse-style gaming may also attract a new global audience.
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