The coronavirus pandemic may have stalled businesses and dragged financial markets down to new lows over the past couple of months but the universe of mobile gaming has benefited immensely from the ensuing lockdown. The social distancing measures have prompted people to seek alternative entertainment options to keep themselves occupied, and mobile gaming offered just that.
The fact that almost everyone has a smartphone makes it even easier for mobile games to fill the void created by social restrictions. Given the exponential rise in the penetration of mobile gaming over the past few months, it seems prudent to take a look at some stocks that are dominating the space right now.
Mobile Gaming’s Popularity Gets Further Boost
Given the surge in the number of mobile game downloads, mobile gaming companies came up with a string of new titles and updates to keep users engaged. More advertising and superior gaming experience also boosted the space.
In fact, Tencent Holdings Limited TCEHY recently reported better-than-expected earnings and revenues on the back of its gaming business. Tencent reported first-quarter 2020 non-GAAP earnings of 40 cents per share, which beat the Zacks Consensus Estimate by 14.3%. The company’s revenues of $15.25 billion also surpassed the consensus mark by 7.5%.According to the company, mobile games got a strong push from hit titles like Honor of Kings and Peacekeeper Elite.
The company mentioned its overseas titles such as PUBG Mobileand Clash of Clans, along with the two aforementioned titles as major driving factors behind its revenue growth.
A similar story lies behind the impressive price performance of Activision Blizzard, Inc. ATVI stock since the beginning of this year. The company’s overall Monthly Active Users (MAUs) were 407 million for the quarter ended Mar 31, 2020 compared with 345 million as of Mar 31, 2019.
Although Activision Blizzard failed to meet the Zacks Consensus Estimate for earnings, its total revenues jumped 23.4% year over year to $1.47 billion. The Zacks Consensus Estimate for the company’s revenues was pegged at $1.32 billion. Robust performance ofCall of Duty and World of Warcraft drove first-quarter 2020 results.
The company’s Call of Duty has hit record popularity since the beginning of this year. The video game franchise attained so much popularity that the company had to roll out two free titles for gamers, Call of Duty Mobile and Call of Duty: Warzone(Mar 10, 2020). These titles were meant to be available with Call of Duty: Modern Warfare available on PC and console. In fact, thanks to the company’s unique titles, it now has more than 100 million monthly active users.
Mobile Gaming’s Tremendous Growth in 2019
Mobile games already account for the majority of the global video gamingindustry. The mobile gaming segment accounted for 60% of revenues in the global video game market in 2019. Revenues totaled $49 billion and profit came in at $16.9 billion, per a report by Golden Casino News.
The global mobile games market is expected to reach a valuation of $56.6 billion by 2024, expanding at a compound annual growth rate of 2.9%.
3 Stocks in Focus
We have hand-picked three stocks that have gained since the beginning of this year. One may keep these companies in their list for future reference. These stocks carry a Zacks Rank #2 (Buy) or #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Activision Blizzard, which belongs to the Zacks Toys - Games - Hobbies industry, have gained 22.8% so far this year compared with the industry’s rise of 6.8%.
Activision Blizzard’s expected earnings growth rate for the current year is 18.7%.The Zacks Consensus Estimate for the company’s current-year earnings has moved 7.7% north in the past 60 days. Activision Blizzard carries a Zacks Rank #2.
Glu Mobile Inc.GLUU is a developer and marketer of free-to-play mobile games for the users of smartphones and tablet devices. The company has popular mobile games such as Disney Sorcerer’s Arena, Design Home, Covet Fashion, Restaurant Dash, Cooking Dash, Kim Kardashian Hollywood and Deer Hunteretc under its belt. Glu Mobile carries a Zacks Rank #2.
Shares of Glu Mobile, which belongs to the Zacks Toys - Games - Hobbies industry, have gained 55.9% so far this year compared with the industry’s rise of 6.8%.
Glu Mobile’s expected earnings growth rate for the current year is 70.6%.The Zacks Consensus Estimate for the company’s current-year earnings has moved 11.5% north in the past 60 days.
Zynga Inc.ZNGA is a developer of mobile games for Apple iOS and Google's Android operating systems. The company also develops games for social networking sites such as Facebook and Snapchat. The gamemaker has a long list of well-known games such as FarmVille 2: Country Escape, FarmVille 3: Animals, Zynga Poker, Dawn of TitansandWords with Friends etc.Zynga carries a Zacks Rank #3.
Shares of Zynga, which belongs to the Zacks Gaming industry, have gained 28.8% so far this year compared with the industry’s loss of 38.7%.
Zynga’s expected earnings growth rate for the current year is more than 100%.The Zacks Consensus Estimate for the company’s current-year earnings has moved 3.8% north in the past 60 days.
Zacks Top 10 Stocks for 2020
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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
Tencent Holding Ltd. (TCEHY) : Free Stock Analysis Report
Zynga Inc. (ZNGA) : Free Stock Analysis Report
Glu Mobile Inc. (GLUU) : Free Stock Analysis Report
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