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 Take-Two Interactive Software Inc. (NASDAQ:TTWO) 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 hand holding a game controller, demonstrating the interactive entertainment of the company.
Take-Two Interactive Software Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 48
Take-Two Interactive Software Inc. (NASDAQ:TTWO) is a major American video game holding corporation. It owns well-known labels like Rockstar Games and 2K, featuring popular franchises such as Grand Theft Auto, Red Dead Redemption, and NBA 2K. The company also has a stake in the NBA 2K League, a professional esports league created in partnership with the NBA, which enhances its presence in the growing esports market.
In the first quarter of fiscal year 2025, the company reported total net bookings of $1.22 billion, which is a 1% increase year-over-year. A significant portion of this revenue comes from recurrent consumer spending, which accounted for 83% of total bookings. Titles like NBA 2K24 and Grand Theft Auto Online continue to drive strong performance, showcasing Take-Two’s (NASDAQ:TTWO) ability to maintain player engagement through popular games.
On September 6, 2024, Take-Two Interactive Software Inc. (NASDAQ:TTWO) announced the launch of NBA 2K25, introducing advanced gameplay features powered by ProPLAY technology. The game features more than 9,000 new animations derived from real NBA footage. This new version of the game includes exciting new modes, enhancing the gaming experience for players. Such innovations not only attract new users but also keep existing players invested in the franchise.
With its established brands and focus on engaging players through innovative releases, Take-Two Interactive Software Inc. (NASDAQ:TTWO) presents a compelling investment opportunity in the esports market. The combination of a loyal customer base and ongoing growth strategies positions the company well for future success.
Over the past 5 years, the corporation has grown its revenue at a compound annual growth rate (CAGR) of 13%.
Analysts are bullish on TTWO. Analysts currently hold a consensus buy rating on the stock and the 1-year median price target of $185.00 set by analysts indicates a potential upside of more than 15% from current levels.
As of the second quarter of 2024, Take-Two Interactive Software Inc. (NASDAQ:TTWO) was held by 48 hedge funds, according to Insider Monkey’s database.
Overall TTWO ranks 4th among the best esports stocks to buy according to hedge funds. While we acknowledge the potential of TTWO 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 TTWO 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.