We recently compiled a list of the 8 Best Esports Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Electronic Arts Inc. (NASDAQ:EA) stands against the other esports stocks.
The Future of Esports: Emerging Trends and Market Potential
The esports sector is experiencing significant growth and transformation, driven by evolving trends and increased investment. According to The Business Research Company, the global esports market was valued at $1.63 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 16.4% during 2024-2028 to reach $3.48 billion by the end of the forecast period.
Technological advancements continue to shape the future of esports. The integration of generative AI in gaming is creating more immersive experiences, while cloud gaming continues to gain traction. As these technologies evolve, they are expected to enhance player engagement and expand the esports audience.
Another key trend is the rise of live streaming. This also offers exciting avenues for both content creators and advertisers looking to connect with a dynamic audience. Comscore’s 2024 State of Gaming Report revealed that gamers spent 45 billion hours on online video content in 2023.
Esports and live streaming are gaining traction, particularly among younger generations. The report shows that about 86% of Gen Z and 80% of Millennials who are aware of esports have watched it. Additionally, 53% of Gen Z and 61% of Millennials have engaged with live streaming. The report also highlights that 79% of viewers prefer watching esports with others. This indicates the social nature of esports.
The rise of platforms like Twitch and YouTube Gaming has made esports more accessible, further fueling interest and participation.
Additionally, the Middle East is emerging as a significant market for esports, thanks to initiatives like Saudi Arabia’s Vision 2030, which aims to diversify the country’s economy. Major events, such as the Esports World Cup held in Riyadh, have drawn thousands of participants and substantial prize pools, showcasing the region’s potential. Here’s a short excerpt from our previous article “7 Best Gaming Stocks To Buy Now” that discusses this in more detail:
“In July and August, the first-ever Esports World Cup took place in Riyadh, Saudi Arabia, attracting over 1,500 players and offering a massive prize pool of $60 million. The event spanned eight weeks and included 23 competitions across 22 different video games, such as Call of Duty and Fortnite.”
Overall, the esports sector is poised for continued growth. As organizations adapt to new market dynamics and leverage innovative technologies, the future looks promising for investors interested in this vibrant industry.
Methodology
To compile our list of the 8 best esports stocks to buy according to hedge funds, we used the Finviz and Yahoo stock screeners to find the largest gaming and esports companies. We also reviewed our own rankings and consulted various online resources. We carefully verified our list to remove any companies that can not be classified as esports stocks. Next, from an initial pool of more than 20 esports stocks, we focused on the top 8 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 8 best esports stocks to buy are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up of a consumer enjoying the company’s games on their mobile device.
Electronic Arts Inc. (NASDAQ:EA)
Number of Hedge Fund Holders: 40
Electronic Arts Inc. (NASDAQ:EA) is a leading American video game company known for developing and publishing popular titles like Madden NFL, The Sims, Battlefield, and FIFA, one of the largest esports games globally. The company is actively involved in the interactive entertainment industry, offering games across various platforms, including consoles, PCs, and mobile devices.
On September 17, 2024, EA hosted its Investor Day, where it outlined its growth strategy focused on building large online communities and creating blockbuster gaming experiences. The company plans to leverage AI to enhance operations and is optimistic about the future of its EA SPORTS brand. Electronic Arts Inc. (NASDAQ:EA) is looking to launch a new Battlefield experience with community testing planned for early 2025.
The company’s management also shared its plan to launch a new EA SPORTS app that aims to expand its business beyond gaming. This socially-driven app will feature sports content, live data, and interactive elements focused on global football, allowing fans to engage with their favorite teams and players. By integrating these features, EA is positioning itself to connect with a broader audience and enhance the overall fan experience, which supports its goal of significant growth in the gaming and entertainment sectors.
In Q1 FY25, Electronic Arts Inc. (NASDAQ:EA) reported net bookings of $1.262 billion, exceeding expectations. This growth was fueled by strong performances from Madden NFL 24 and FC Online. The company’s net revenue was $1.66 billion in the first quarter of fiscal 2025.
With its established franchises and a clear strategy for future growth, Electronic Arts Inc. (NASDAQ:EA) represents a solid investment opportunity in the esports market. The company’s focus on innovation and community engagement positions it well for success in the competitive gaming landscape.
Over the past 3 years, Electronic Arts Inc. (NASDAQ:EA) has achieved a compound annual growth rate (CAGR) of 8% in its revenue, while its net income has grown at a CAGR of 19% during the same period.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 40 hedge funds held stakes in Electronic Arts Inc. (NASDAQ:EA). EA ranks among the top 5 on our list of the best esports stocks to buy according to hedge funds.
Overall EA ranks 5th among the best esports stocks to buy according to hedge funds. While we acknowledge the potential of EA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.