The demand for video games, which was accelerated by COVID-19- pandemic restrictions, could increase further in the coming months as children take a break from their online classes during their summer vacations. With that, we think it could be wise to invest now in fundamentally strong gaming stocks Playtika (PLTK), Ubisoft (UBSFY (OTC:UBSFY)), Spin Master (SNMSF), and Gravity (GRVY). Read on for more details.The COVID-19 pandemic served as a blessing in disguise for the video gaming industry, which saw a major surge in its consumer base as people spent most of their time at home. Investors’ interest in the video gaming stocks is evident in VanEck Vectors Video Gaming and eSports ETF’s (ESPO) 54.6% gains over the past year compared to the SPDR S&P 500 Trust ETF’s (SPY) 38.6% returns.
As the school summer recess period begins—meaning a break from remote or hybrid classes—children especially are expected to spend much more time on video games. This, along with the increasing availability of online, mobile and browser games, should increase the demand for video games in the near- to midterm. According to a PR Newswire report, the global video games market is expected to grow at a 9.3% CAGR between 2020 and 2027.
Given this backdrop, we think it could be wise to bet on shares of video gaming companies Playtika Holding Corp. (PLTK), Ubisoft Entertainment SA (UBSFY), Spin Master Corp. (SNMSF) and Gravity Co., Ltd. (GRVY). We believe they are well-positioned to gain from the increasing demand for video games.