Esports Stocks – Find the Best Esports Stocks to Invest in
Investing in esports stocks is one way to take financial advantage of the global success of competitive gaming. Over the past decade, esports brands like Twitch and ESL along with teams like Cloud9 and TSM have achieved multi-million-dollar valuations. In the case of Twitch, it achieved a multi-billion-dollar valuation.
The potential for growth in the esports industry means that the sector was a great choice for investors in 2020 and could be the stock to invest in, once again, for 2021 and beyond. That said, we have to pay a little attention to the effects of the Covid-19 pandemic and bear these effects in mind when investing in esports in 2021.
For instance, the valuations of esports teams plateaued in 2020 as these teams were unable to compete in the massive on-location tournaments that were driving huge revenues for teams, organisers, stadium-builders, sponsors, and game developers. In contrast, video game sales are expected to have increased by 20% in 2020, streaming is booming, and online esports and associated activities are where to pay attention amidst continuing global lockdowns.
We predicted esports stocks would be the way to go in 2020, long before the Covid-19 pandemic hit. Instead of suffering in 2020, like many industries, the esports and gaming industry proved its resilience as people stayed home – and played. Though physical professional tournaments may continue to be impacted by Covid-19 in 2021, the interest in online esports, gaming, buying esports stocks, and betting on esports and gaming, is all growing. Going beyond 2020, the return to in-person tournaments has seen record breaking attendance in person and online.
Some esports companies and teams are publicly listed, allowing you to buy their shares so that you can help invest in their future, whilst earning a profit share as they grow. Some can even issue dividends, giving you a share in their success each year as they grow. Others are owned by larger publicly listed corporations which operate in others sectors too, by investing in the overall company you are investing in esports too.
Most gamers are probably more interested in playing games rather than watching esports stock prices. But if you are keen to put your gaming knowledge to good financial use, then figuring out how to buy stocks in esports could be a wise move.
Here is a quick guide to start you off in recognizing the best esports stocks, and a look at some of the most valuable esports stocks 2021 has to offer.
What are esports stocks?
Esports stocks are shares that a gaming or esports team company puts up for sale. These represent a proportion of the total value of the company. By investing in such stocks, you own that portion of a company. So you stand to gain from that company’s success. This could be through the company’s growth, so when you sell the stock it has a higher value. Or some companies issue dividends that share a fraction of their profits with stockholders.
Most companies start off as a private enterprise. But when a company grows in size, it might decide to become publicly listed on stock exchange by having an Initial Public Offering (IPO). The resulting shares, broadly speaking, are available for anyone to buy. This divides the company up into shares. So, if a company is worth $100 million and they issue 50 million shares, the stock price would be $2.
As a company becomes more profitable, the value of your stocks increases. But conversely, if a gaming company hit a downturn in their fortunes, you would see the value of your investment reduced. Investing in stocks and shares, of any kind, can be rewarding but it can also be very risky.
The value of stocks constantly changes in correspondence to the actual and perceived performance and value of the company. For example, if a gaming company announced plans to release a promising new product, you might see their share price rise. But if an esports brand revealed disappointing sales figures, then their esports stock price would likely fall.
Even outside of a specific stock, prices are affected by industry wide or market wide events. Esports stocks will often dip alongside bad news for gaming or live events as they effect how well esports perform. Equally, a whole market downturn would see esports stocks drop in value along with the wider market even when nothing esports-specific has happened.
By monitoring the market value of esports shares as well as company performance, news, and how the wider market is performing, you will get a good indication of which esports stocks to buy and which to leave well alone.
Why should you start investing in esports stocks?
Making money from esports is the obvious reason why you might want to invest in the best esports stocks. The stock market, approached correctly, can offer a faster way to get a return on your money rather than other forms of investment, esports shares could make you money if you are willing to take the risk.
Compared to opening a standard bank savings account, for instance, investing in stocks could see your money grow at a surprisingly fast rate. This is especially so in relatively new industries experiencing fast growth rates, such as esports, where fledgling brands can seemingly grow overnight into billion-dollar businesses. However, markets can down into downtrend just as quickly.
The liquidity of stocks should not be underestimated, it’s important to remember that the price and value of shares can go up as well as down. As a result, buying even the best esports stocks can be a bit of a gamble. So be sure that you are 100% sure of your investment and/or in the worst case can afford to lose it before you open yourself up to the risks of the volatile esports market.
How to invest in esports stocks
If you are thinking about investing in esports stocks, first you need to learn all you can about esports investing. So, learn about buying stocks, esports companies, game developers, big companies who have esports or gaming divisions and other related companies like hardware and peripherals companies. You also need to learn how investing in general works. You can make better decisions if you do your research on stock ownership, such as choosing a good brokerage to buy your shares on, market cap and float, along with key metrics for valuing a stock such as price to earnings. It is important to learn how to judge if a stock’s current value is a good investment, or if it is currently overvalued compared to the company itself.
There are a number of ways to invest in esports or buy esports stocks. You can buy esports stocks directly or buy stocks of related industry companies. You could choose to invest in esports ETFs instead of directly into esports stocks, we will cover these more a little later. As buying stocks is after all a form of gambling you could also consider betting on esports or even buying the cryptocurrencies of blockchain game developers.
If you are really serious about investing in esports, or buying esports stocks, you might want to consider using a stockbroker or contacting an investment expert, one who already knows the industry well and can advise you. There are stock trading websites but also investment websites and programs and brokers who work remotely, always look for a reputable site or broker.
How to buy stocks in esports
Wondering how to invest in esports? Many people tend to buy stocks online from share dealing platforms. By heading to one of these sites you should be able to buy shares from any esports or gaming company listed on a stock exchange. Share dealing platforms cover the larger stock exchanges like the London Stock Exchange.
A stock brokerage is a company which is licenced to purchase and hold stocks on behalf of an individual investor. You have loads of choices here, with many online brokerages even operating without fees now. However, in these cases there is usually a trade off with the brokerage making money off of your data to facilitate fee-free trading. Check which brokerages are available in your region before opening an account with one.
In order to buy shares, you will need to set up and fund your trading account. From here, it’s just a matter of deciding which esports stocks to buy. Just remember that all share dealing platforms tend to include dealing charges and commissions that should always be factored into your investing.
There is also the option of working directly with a investment manager instead of going through retail trading. There are many options available online, from sites where you can purchase stocks directly that don’t offer advice or other services, to comprehensive full-service investment platforms. Some banks even offer stock brokerage services to buy and hold your stocks for you too.
If you’re looking to purchase shares in a company directly, double check that is what you’re purchasing. Many online-only brokerages actually operate with ‘contracts-for-difference’ or CFDs. These are derivatives where you bet on the upcoming movement of a stock price rather than owning a share of the company itself. This is pretty different and is rarely profitable, so check that you’re looking at the form of stock ownership that you’re aiming for.
Cryptocurrencies are a growing area which some might confuse with purchasing stocks. While you can purchase shares in some blockchain companies, it is different from buying crypto or tokens themselves. The tokens are an asset rather than an investment in a company. Often you can buy crypto through a stock brokerage, but it is important to be aware of the difference. The cryptocurrency industry is still very new, and very unregulated in many regions, take care to look for well-reputed platforms and ensure you take extra data and cybersecurity measures.
Investing in esports ETFs
A somewhat less-risky alternative to buying esports shares in one company directly is to invest in an exchange-traded fund or ETF (f. An ETF is a type of security available to buy like a share, but which tracks an underlying index or a basket of shares. ETFs can consist of multiple investment types, not only shares.
An ETF’s “basket” can include shares from multiple companies across many industries. Many though, will focus on stocks from several companies within one industry. The ETF’s managers will pick out the top companies to invest in, saving you the hassle. ETF investors can gain access to the growth of an industry, without needing to choose just a single company to invest in. The ETF manager is also responsible for balancing the TF, which could have larger holdings in one company or another. A good ETF should actively manage its balance, so you’re exposed to the potential risk or growth of an entire industry.
The main advantage of ETFs is stability. You’re shielded from downturns in a single company, instead getting a hedged investment in an entire industry. They aren’t all created equal though. Some ETFs have higher costs associated with managing them which can cut into your value, so do you research on who runs the ETF and how their management is rates.
Esports ETFs to Look at
NERD ETF is an exchange-traded fund that specifically deals in gaming and esports stocks. Its basket, or portfolio, of stocks of publicly traded companies includes game publishers, streaming networks, esports team owners, tournament organisers, and hardware companies.
There are a growing number of esports ETFs targeting millennial investors, some mix-up portfolios with other industries of interest like sportwear and technology, whilst others purely focus on esports. Global X Millennials Thematic ETF (MILN) and Principal Millennials Index ETF (GENY) offer investments in the likes of Apple, Disney, Adidas, Facebook, and Uber. Whereas the VanEck Vectors Video Gaming and esports ETF tracks an index of 25 companies across the gaming and esports industry.
ETF Managers Group LLC (ETFMG) also has an ETF targeting the video game industry, the GAMR ETF focuses on gaming technology. Its portfolio of companies includes GameStop, Codemasters, Corsair and Nintendo. The Global X Video Games & Esports ETF, or HERO ETF, focuses on companies which gain at least half their revenue from video game or esports activities, it has a slightly larger focus on mobile games. Its portfolio includes Nintendo, NVIDIA, as well as Activision Blizzard, Electronic Arts, and Take-Two Interactive.
Now that we have covered the basics of how to buy stocks in esports, it’s time to think about the best esports stocks 2021.
What are the best esports stocks to buy?
Now that we have covered the basics of how to buy stocks in esports, it’s time to think about the best esports stocks 2020 has to offer.
The biggest names in Esports
If you want to invest in some of the biggest names in esports, then you could start with the companies that own these brands.
For example, Twitch is owned by Amazon, and YouTube is one of Google’s subsidiaries. Sadly, you can’t just own Twitch stocks! But, by owning shares in these parent companies, you will be investing in some of the biggest brands in the world as well as benefitting from the growth of the esports market.
Such investments can often be seen as a safer bet, these parent companies are well-established, and their share price has a history of stability and growth. They are also exposed to other sectors like e-commerce or cloud services. These factors can make larger companies some of the best esports stocks to invest in as their share prices have less volatility than newer or more niche companies. These companies are considered very stable, but you should be aware of what it is that you’re buying.
In the example of Twitch, Amazon is a huge company and you’re investing in a lot more than just Twitch. The company also re-invests most of its profits into research and development. So while Amazon is one of the biggest and most successful companies, they don’t pay any dividends. You’re investing to Amazon for future growth in the stock, price you won’t receive a share of the profits. These kinds of factors are why it is important to do your research, even when looking at a big company like Amazon.
Major game developers
Major game developers like Electronic Arts, Activision Blizzard, Take Two and Riot Games may offer a fair degree of stability. Not only are they established in the video games market, but they too are growing in size and value because of the massive success of esports. However, even big developers have problems so it is worthwhile keeping an eye on the company and your investment. Activision Blizzard has a lot of successful Ips, but a PR and moral issue has lead to their stock sliding 20% over 6 months. These kinds of risks are still present, even with bigger developers.
If you’re looking at a bigger company, it can be a good idea to wait until the stock price is lower because of some negative news. If you have faith that the developer will bounce back, it could really pay off. Such as investing in Nintendo during the failure of the WiiU, which lead to massive returns with the success of the Switch.
In the fast-growing mobile game market, stocks of Glu Mobile are tipped by Motley Fool to perform well in 2021. The range of esports stocks to invest in for 2021 is truly broad.
Gaming hardware brands
Then, there are gaming hardware brands like Logitech and Nvidia which could be worth a look. Don’t also forget that China is one of the world’s biggest esports markets, so shares in giants like Tencent and NetEase could also prove to be shrewd investments. However, the China economic system is very different and it means that investing in Chinese stocks is considerably more complicated than western ones. (In a lot of cases, you’re actually investing in a separate company based in the Cayman Islands that tracks the original company but isn’t related.) Make sure you know how investing in Chinese stocks works and weather you’re purchasing a stock or a derivative before investing in one of these companies.
PC component maker Corsair Gaming completed its IPO in September 2020 and its stock price rose 170% from its first day trading value. Corsair has had great success over recent years, with a good room to grow in an expanding market too.
If you are looking for esports stocks to buy that could give you a faster route to larger profits, then it could be worth looking at some smaller companies. Imagine if you would have invested in Amazon back before the e-commerce giant really took off. Although, these are definitely riskier. Also bear in mind that market cap determines how expense a stock is, not the price of a share.
Esports teams and small companies
As well as smaller esports companies with potential, esports teams are now starting to publicly list meaning you can buy their shares directly. Astralis, for example, was one of the first esports team owners and media organizations to go public, they currently have three esports teams within their esports business.
Buying TSM esports stock is not yet possible, Team Solomid is currently a privately owned company with a number of major private investors. You can still support TSM and its successful esports teams by looking for investments in the game titles its teams participate in. TSM acquired the Blitz playing analysis and training app in 2020 and it now makes up half of the company’s $45 million in revenue. This is a prime example of esports diversifying to copy with the impact of Covid-19. Cloud9 esports stocks are also not available as the team and company has not publicly listed. It currently has 27 private investors or investment funds as backers.
Don’t forget that esports teams as well as organisations and streaming services might be owned by a larger company and you can back them by buying shares in their parent. Immortal Gaming, for instance, is owned by Anschutz Entertainment Group. They also own other famous brands such as Electronic Arts owns Respawn Entertainment which released Star Wars Jedi: Fallen Order along with EA’s stable of shooters and sports titles. Media behemoth Comcast operates tournaments, is building a stadium and owns its own professional gaming teams.
Then, there are also traditional sports teams like professional football clubs Ajax and AS Roma who now own their own esports teams. And traditional sports backers like Madison Square Garden (MSG) have moved across to owning esports teams. Looking for companies like this could be a balanced way to invest in the phenomenon of esports.
Even the best esports stocks could be a risky investment
If you are looking for esports stocks, 2021 has even more options than 2020. There is an incredible amount of hype surrounding an industry that is valued at nearly $1 billion in annual revenue and is expected to triple in size in the next few years.
Despite sustained industry growth, some believe the esports bubble will burst. So be sure to think carefully about how much risk you are exposing yourself to when you decide to invest in esports stocks. If you are wondering how to invest in esports stocks, do thorough research and pick credible outlets for your investing activities.
Not a big fan of stocks? Betting with bitcoins is another way to make money with esports. Read our guide.