The Olympics just ended. Regular season NFL football is less than a month away. The NBA opens on October 19th. Who wins the viewer ratings in the US? It should come as no surprise that football is king with 141 million viewers. Second place was none of the above. Esports viewers in the United States alone are projected to grow to 84 million in 2021.
To put that in perspective, Major-League Baseball boasts 79 million viewers. The NBA lays claim to 63 million. Neither is growing as fast as esports. The 2021 Free Fire World Series (FFWS) in Singapore peaked at 5.4 million viewers. This year’s Superbowl only had 5.7 million viewers. That’s certainly something to sit up and pay attention to.
From an investor’s perspective, the viewer numbers make esports a viable industry worth portfolio inclusion. Like any other sector, it has its good bets and bad beats. In today’s article, we’ll analyze the industry as a whole and profile a few companies we feel are worth taking a chance on. Keep in mind that the potential for profits grows as viewer numbers increase.
Esports Growth Trends and Revenue Statistics
According to Insider Intelligence, global viewership for esports is projected to grow at the rate of 9% per year. Their numbers show 454 million viewers worldwide in 2019, growing to an estimated 646 million in 2023. That growth is fueled by platforms like Twitch, YouTube, and the recently launched Facebook Gaming so that growth multiple could increase.
As for revenue numbers, Statista reports that the video game market in the United States alone is worth $65.49 billion in 2021. Globally, it’s estimated at $175 billion. Mobile game spending in the first half of 2021 was $44.7 billion, an increase of nearly 18% from the same period last year. $26 billion of that came from App Store in-game spending.
Top Three Esports Stocks to Consider
Using traditional metrics, we analyzed several esports stocks and have come up with a “Top Three” list for the last few months of 2021. The following recommendations are based on performance history, market capitalization, price-earnings ratio, and corporate structure. We’ve also considered the meme stock effect wherever that’s relevant.
Pick #1: Corsair Gaming (NASDAQ: CRSR)
Seeking Alpha declared Corsair as a meme stock back in June when the WallStreetBets Reddit community started paying attention to it. Share prices briefly went to $36, then settled back down again. It closed at $28.25 today. Despite that, we like it. The price-to-earnings (P/E) ratio is 17.38 and the company has been around since 1994. Since going public last September, they’re up 64%.
Pick #2: Activision Blizzard (NASDAQ: ATVI)
Activision Blizzard was on a steady uptrend from May 2019 until February 2020, then fell off a cliff during the pandemic. At its current value of $81.41, it is priced to buy. That’s not just a gut feeling. Earnings per share of $0.84 and revenue $2.07 billion in the first quarter of 2021 both exceeded expectations. Could there be another “Call of Duty” in the cards for them? Bet on it.
Pick #3: Roblox Corp (NYSE: RBLX)
Roblox is the baby of the bunch on this list with an inception date in 2004 and performance history of just over one year as a public company. During that period, they’re up 22.68%. Revenue for Q1 of 2021 was $387 million, beating projections by 40%. Their bookings increased 161% over that same period and the platform now averages 42 million daily users.
Disclosure: Neither Matt Rego nor Spotlight Growth have any position or relationship with any companies mentioned in this article. No payment was made to create this article. This article should not be taken as a solicitation or recommendation to buy or sell any securities. Please conduct your own research and consult your financial advisor to determine your risk tolerance and investment path. We are not licensed brokers or investment advisors.