With growing, explosive interest in eSports, and eSports stocks, analysts say the market could grow from just $1.42 billion in 2022 to nearly $4.47 billion by 2030. In addition, analysts at Statista are forecasting 924.5 million eSports users by 2028. Coupled with a growing number of tournaments, teams, sponsors, and advertising dollars, the eSports market is only expected to see stronger double-digit growth.
eSports has become so popular that Saudi Arabia launched an annual eSports World Cup, which will include some of the most popular games on the market, with massive prize money. “The Esports World Cup is the natural next step in Saudi Arabia’s journey to become the premier global hub for gaming and esports, offering an unmatched esports experience that pushes the boundaries of the industry,” said Saudi officials, as quoted by Reuters.
In short, we’re talking about a massive opportunity for eSports stocks, such as:
Take-Two Interactive (TTWO)
One of the most impressive gaming and eSports stocks of the year has been Take-Two Interactive (NASDAQ:TTWO). Thanks to excitement over the upcoming release of Grand Theft Auto VI, the stock exploded from about $132 to $161.62. From here, it could see higher highs on further GTA excitement and sales.
Another key catalyst is TTWO’s NBA 2K eSports franchise, which just partnered with One Up for on-demand amateur eSports. Plus, according to eSports Illustrated, “The 2023 NBA 2K League season saw a 58% viewership increase from last year and 22% in the average minute audience on Twitch and YouTube. The 5v5 Finals match between Warriors Gaming Squad and NBL Oz Gaming on Saturday, Aug. 5 had more than 617,000 unique viewers.”
That’s only expected to grow moving forward.
Skillz (SKLZ)
There’s also Skillz (NYSE:SKLZ), which offers a software platform where players can compete in casual mobile games. While earnings have been nothing to write home about, SKLZ is still one of the top pure-plays in an explosive eSports market.
In its most recent quarter, the company posted third-quarter EPS of $1.57, which did miss expectations by six cents. Revenues of $36.4 million also missed by $3.4 million. Again, nothing to write home about.
However, SKLZ did announce a $65 million stock buyback program in late August, and it is part of a potential $4.47 billion eSports market. The buyback news also tells us the board still believes SKLZ is severely undervalued at its current price. It’s also showing interest in lowering its debt, as it looks into repurchasing “$65 million of outstanding 10.25% senior secured notes due in 2026,” as noted by Seeking Alpha in August.
Also, according to TipRanks.com, analysts rate SKLZ as a moderate buy, with a $9.25 target price. The highest price target on the SKZL stock is $15 a share.
Global X Video Games and eSports ETF (HERO)
Or, if you want to diversify among some of the top eSports stocks, there’s also the Global X Video Games and eSports ETF (NASDAQ:HERO). With an expense ratio of 0.50%, and 48 holdings, the HERO ETF invests in stocks that develop or publish video games, facilitate streaming and esports content, own and operate within competitive esports leagues, or produce hardware used in esports, as noted by GlobalXETFs.com.
Some of its top holdings include Take-Two Interactive, Roblox Corp. (NYSE:RBLX), Electronic Arts (NASDAQ:EA), Netease.com (NASDAQ:NTES), and Unity Software (NYSE:U) to name a few of the top ones. Better, over the last few weeks, the HERO ETF ran from about $18 to $20.68 before pulling back to $20.10. From here, I’d like to see the ETF retest resistance around $26.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
