Mobile gaming has been steadily gaining popularity over the past few years, thanks to the rising Internet penetration and proliferation of smartphones across the globe. What makes mobile games compelling is that unlike traditional personal computers or console games which require users to purchase relevant hardware, mobile games don’t necessarily require such additional spending and can be played on a decent smartphone.
Additionally, mobile gaming has also lured casual gamers into its fold. This is because mobile games have rapidly adopted a free-to-play model wherein the user is not required to pay any upfront cost to purchase a game. They can simply download it on their smartphone and try it out. If they like it, they can choose to pay for in-app purchases later on. In fact, some free-to-play users seldom opt to pay and instead, grind their way through the game content, often in exchange for in-game advertisements. Moreover, the number of game titles available is also increasing on a regular basis as various companies are looking to grab the potential of mobile games, giving users more options to choose from.
Meanwhile, thanks to the more capable processors that smartphones sport these days along with technological advancements, developers have the liberty of bringing out graphic-intensive titles while maintaining the game’s overall performance. This has helped in bringing the user experience closer to that of any console or PC title. Conversely, developers are also bringing out less processor-intensive games and even lighter versions of popular gaming titles, to allow more entry-level smartphone users to play.
Moreover, another factor that works in favor of mobile games is that smartphones are portable, which means that users have the convenience of playing a game whenever and wherever they want and even if they are lacking Internet connection, several titles that support offline playing are also available.
Reflective of these positive developments, the mobile gaming market is expected to expand ahead. Per a report by Mordor Intelligence, the mobile gaming market is expected to witness a CAGR of 12.6% during the forecast period of 2021 to 2026. Meanwhile, this widening appeal of mobile games has also bolstered the e-sports market. Several e-sports competitions are hosted around the world related to mobile gaming titles. Notably, e-sports analytics provider Newzoo predicted that mobile gaming will be one of the factors driving the growth of the e-sports market, as mentioned in a Reuters article.
4 Stocks to Watch
Mobile gaming has been taking the gaming industry by storm as users have the convenience of picking up a smartphone and find a gaming title they enjoy, without the hassle of purchasing additional hardware or be an intensive gamer. This makes it a good time to look at companies that have made in-roads into the mobile gaming market and stand to make the most of this potential going forward. Notably, we have selected four such stocks that 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.
Activision Blizzard, Inc. ATVI has popular mobile gaming titles like Candy Crush as well as Call of Duty Mobile which held its e-sports championship last year. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 1.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 5.8%.
Electronic Arts Inc. EA has forayed into the mobile gaming market with several of its popular gaming titles, including Need for Speed, Sims, FIFA, Plants vs. Zombies and so on. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 1.8% over the past 90 days. The company’s expected earnings growth rate for the next five years is 6.6%.
Glu Mobile Inc. GLUU, together with its subsidiaries, develops, publishes, and markets a portfolio of free-to-play mobile games for the users of smartphones and tablet devices. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 14.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 96.4%.
Take-Two Interactive Software, Inc. TTWO has brought several of its classic Rockstar Games titles like the GTA series, Max Payne and so on, to the mobile gaming platform where users can purchase the game upfront and play. Moreover, the company also has other mobile titles under its 2K label. Take-Two currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased nearly 2% over the past 60 days. The company’s expected earnings growth rate for the next five years is 9.6%.
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