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3 Stocks to Watch Amid Continued Demand for Mobile Gaming

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The popularity of mobile gaming grew unabated in the first half of 2021. According to a report by App Annie, in the first half of this year, consumers spent $1.7 billion per week on both iOS store and Google Play Store purchases of mobile games. This represents an increase of 24% year over year and 40% from the pre-pandemic levels of 2019, as mentioned in a Gaming & Media News article. In fact, the article stated, citing App Annie, that worldwide consumer spending on mobile gaming is set to surpass $120 billion this year, suggesting an increase of about 19% from last year and almost 40% from 2019.

But what led to this booming demand for mobile gaming? Well, the answer lies in the fact that mobile games have come quite close to their console and personal computer counterparts. Smartphone processors are becoming more capable of handling quality graphics, thereby enhancing the gaming experience. The introduction of multiplayer gaming is also making mobile gaming more lucrative as gamers can now freely interact with each other even while playing. Besides, numerous single-player games with engaging storylines are being offered. Companies are also bringing out the mobile versions of popular games that are available on other platforms.

Several free-to-play titles have brought many casual gamers into mobile gaming since they give users the option to download and play a game for free at first. If they like what the game has to offer, they can buy the full game or make in-app purchases. There are, however, free-to-play gamers who grind through the various in-game campaigns to progress through the game.

What’s more is that video streaming giant Netflix, Inc. NFLX is looking to expand its offering and has decided to enter the gaming market. It’s interesting to note that the company will focus on mobile games at first. The games will be included within the member’s Netflix subscriptions without any extra cost, as cited in a Verge article.

In fact, owing to the prolific rise in demand that mobile gaming is witnessing, Newzoo predicted that in 2021, 2.8 billion of the world’s 3 billion gamers are expected to play on a mobile device, as mentioned in a Venture Beat article. A separate report from ReportLinker also predicted that mobile gaming will continue its good run going forward. The report stated that the global mobile gaming market is expected to witness a CAGR of 11.5% from 2020 to 2027.

3 Stocks to Watch Out For

The demand for mobile games looks set to continue going forward as users spend more on such games and enjoy an enhanced experience that is moving increasingly close to the console and personal computer games. This seems then a good time to look at companies that can benefit from this potential. We have selected three such stocks that carry a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mattel, Inc. MAT offers mobile games like Hot Wheels id and has also entered into a joint venture with NetEase and formed Mattel163, which has launched several mobile games based on several Mattel toys and properties, like UNO and Phase 10, along with original games.

Shares of Mattel have risen 25.6% year to date and it currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 16.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 94.4%.

Microsoft Corporation MSFT offers a mobile spin-off of its popular Forza racing franchise, namely, Forza Street, which is a free-to-play title. Other mobile games offered by the company include Mahjong and Microsoft Solitaire Collection.

Shares of this Zacks Rank #2 company have risen 31.7% year to date. The Zacks Consensus Estimate for its current-year earnings increased 3.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 8%.

Roblox Corporation RBLX develops and operates an online entertainment platform. It offers Roblox Client, an application that allows users to explore 3D digital worlds. Users have the option of playing games created by others or develop their own games. Roblox can be played on mobile devices as the app is available for download on both the iOS store and Google Play Store.

Shares of Roblox have gained 20.8% year to date. The Zacks Consensus Estimate for its current-year earnings increased 15.3% over the past 60 days. This Zacks Rank #3 company’s expected earnings growth rate for next year is 14.5%.


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