Daily Management Review

Four companies to invest in Esports


If you still think that video games are for children, keep in mind that, according to estimates by the American Software and Computer Games Manufacturers Association, the average age of a player is 34 years, while about two thirds of American families play video games. In fact, it is a fast-growing multi-million dollar consumer industry.

Lyncconf Games
Lyncconf Games
Other countless statistics prove the global popularity and bright future of the video game industry. But it is obvious that the most important parameter for investors is the profit that they can receive by investing in companies from this sector.

Below we will tell about four companies, the dynamics of whose shares will delight shareholders as cyber sport is gaining popularity.


The easiest way to make money on a video game megatrend is to invest in a specialized ETF. Undoubtedly, this is a niche fund, but it is definitely viable, as evidenced by its three-year history and approximately $ 100 million of assets under management.

The fund includes more than 70 companies: from small software studios to major manufacturers of equipment and technological conglomerates. Video Game Tech ETF is also a truly global foundation. It includes companies whose names American buyers will recognize at a glance, as well as some Chinese manufacturers, known mainly to gamers from Asia. For example, at present, the main component of the fund is Hong Kong-based iDreamSky Technology Holdings, which develops mobile games. It should be noted that access to shares of this company is very difficult for investors from the United States.

Since its introduction in 2016, the ETF has shown good results - it has grown by about 75% compared with 45% for the S&P 500 index.


Although many investors and gamers may not be aware of this, one of the most influential companies in the gaming space is Chinese technology company Tencent Holdings. You may not know about its existence, since it released the main hits under other brands. Tencent's subsidiaries include, for example, Riot Games, the publisher of the League of Legends game, which became extremely popular several years ago. It also owns 80% of Grinding Gears Games, which releases the well-known game Path to Exile, and 40% of Epic Games with its legendary Fortnite, which has more than 250 million players worldwide. In addition, Tencent owns minority stakes in Activision Blizzard and Ubisoft Entertainment.

In a sense, Tencent is a proprietary version of the ETF for video games, given how widely its influence has spread across the industry. However, it is important to understand that Tencent is similar to other technology giants, including Alphabet, the parent company of Google, and Amazon.com, from the point of view that the range of its interests is very wide. Investors looking for a diversified position in this sector may find Tencent stocks attractive.


Unlike Tencent, Nintendo is one of the most famous companies in the history of video games. A few years ago, the company experienced a difficult period, mostly due to the failure of the Wii U console. Then, together with the innovative Switch console, it was a success. Since the beginning of 2017, the value of shares has increased by almost 70%, including 30% since the beginning of 2019.

The growth was due to several reasons, including the success of Mario and Zelda video game franchises, as well as the company's efforts to make its platform easily accessible to software developers. The result was a live ecosystem of next-generation games for both consoles and mobile devices.


Nvidia technology is also closely associated with eSports. All serious gamers use the company’s keyboard and mouse, striving to achieve maximum performance in order to secure an advantage in competitions for at least a few milliseconds.

Over the past few years, Nvidia stocks have been subject to fairly strong volatility. This is due to the fact that at first cryptocurrency miners caused a surge in demand for the company's products, and then sales sharply declined, as prices for Bitcoin fell from heaven to earth.

But the worst is over, and even such short players, like Citron Research, retreated from their “bearish” position after Nvidia shares fell by more than 50% at the end of 2018.

In the future, the dynamics of the company's shares will be closely linked to the success of its main business in the production of hardware. Recently, representatives of Nvidia reported that the new RTX video card is the main breakthrough of the company over the past 15 years.

In addition, the company's presentation on the day of the investor showed a five-year growth rate in revenue from gaming equipment by 29%, including an increase in revenue for the year by 59% for the fast-growing gaming notebook segment. Now that the dust has settled and investors are focusing on the “old” Nvidia, analysts expect that its business will go uphill.

source: marketwatch.com