These Three Stocks Will Be Key Players In 2024's Gaming Boom, Says Analyst
Portfolio Pulse from Franca Quarneti
BMO Capital Markets released an industry primer with a positive outlook for the gaming sector in 2024, highlighting the growth potential of megahit titles and the expanding console market. The report emphasizes the importance of owning franchises like Electronic Arts Inc's EA Sports FC, Take-Two Interactive Software Inc's Grand Theft Auto, and Roblox Corp's Roblox, citing their strong positions and potential for revenue growth. The gaming industry has seen revenues double to $193 billion in 2023, with 3.4 billion gamers globally. BMO projects robust growth in the console market, particularly in the U.S., and recommends investing in companies with significant console game revenue like EA and Take-Two. The report also notes the evolution of business models and the dominance of megahit titles as key investment drivers. Roblox is highlighted for its unique platform and user retention beyond age 13, with expectations of improved monetization and cash flows.
January 09, 2024 | 7:18 pm
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POSITIVE IMPACT
Electronic Arts is well-positioned to benefit from the console market expansion and the dominance of its megahit title EA Sports FC. With 60% of its revenue from console games, EA is expected to see sustained growth.
EA's significant revenue from console games and the projected doubling of the console install base by 2027 positions it to capitalize on market growth. The focus on megahit titles like EA Sports FC aligns with BMO's investment strategy recommendations.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90
POSITIVE IMPACT
Roblox Corp is highlighted for its unique platform and potential for growth, especially with its ability to retain users beyond age 13. BMO expects Roblox to improve monetization and cash flows going forward.
Roblox's platform, which retains users and allows them to create content, aligns with BMO's positive outlook for the gaming sector. The company's expected operational leverage and cash flow improvements make it a key player.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90
POSITIVE IMPACT
Take-Two Interactive is poised to benefit from the console market growth and the continued success of its Grand Theft Auto franchise. With 43% of its revenue from console games, TTWO is expected to leverage the expanding market.
Take-Two's strong revenue from console games and the dominance of its Grand Theft Auto title align with the growth trends in the console market, as forecasted by BMO. The company's focus on AAA titles supports its competitive edge.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90