The video game industry has gained momentum during the COVID-19 pandemic thanks to the increased demand for online games and consoles to escape the boredom of being cooped up at home. Industry players in this space have largely benefited from a surge in demand.
At the height of the pandemic, Professor Joost van Dreunen of New York University said, “The gaming industry is swimming in money. It just rains money on these people, on these companies.
While interest in outdoor games has revived considerably since COVID-19 restrictions began to ease, video games are becoming more immersive, realistic and advanced every day to continue to attract users. According to Grand View Research, the global video game market is expected to grow at a CAGR of 12.9% through 2030.
The proliferation of smartphones coupled with high-speed internet connectivity powered by 5G and the application of AR/VR in modern games are expected to drive the growth of the gaming industry.
According to PwC’s global entertainment and media outlook, the booming industry is set to maintain rapid growth and could be worthwhile $321 billion by 2026. Given the industry’s long-term growth outlook, quality gaming stocks Playtika Holding Corp. (PLTK) and DoubleDown Interactive Co., Ltd. (DDI) could be ideal candidates to buy and hold.
Playtika Holding Corp.. (PLTK)
Based in Herzliya Pituarch, Israel, PLTK is a mobile gaming technology and entertainment company with a portfolio of casual and casino-themed games.
On March 23, 2022, PLTK acquired JustPlay.LOL, an Israel-based multiplayer game creator. The acquisition bolsters the company’s growth strategy by expanding its offerings into high-growth action and battle royale genres.
For the fiscal second quarter ended June 30, 2022, PLTK’s revenue was flat year-over-year at $659.60 million. From the company Cash and cash equivalents was $1.17 billion, up 14.6% from $1.02 billion for the year ended December 31, 2022. Its total assets increased 7.2% to $3 billion.
Analysts expect PLTK’s EPS for the first quarter ending March 31, 2023 to rise slightly year-over-year to $0.20. Its revenue for the current quarter ending September 30, 2022 is expected to increase 5.4% year-over-year to $670.05 million. Over the past month, the stock has lost 11% to close the last trading session at $12.10.
PLTK’s POWR ratings reflect this promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Rankings evaluate stocks on 118 different factors, each with its own weighting.
It has an A rating for value and a B for quality. Within the Entertainment – toy and video game industry, it is ranked No. 5 out of 22 stocks. To view PLTK’s rating for Growth, Momentum, Stability and Sentiment, Click here.
DoubleDown Interactive Co.,Ltd. (DDI)
Based in Seoul, South Korea, DDI is engaged in the development and delivery of digital games on mobile and web platforms. Its offerings include DoubleDown Casino, DoubleDown Fort Knox, DoubleDown Classic, Undead World, and Ellen’s Road to Riches.
On January 13, 2022, the company invested $1.5 million in Epic Games, setting foot in the metaverse. This investment gives the company exposure to the rapidly growing metaverse.
For the fiscal first quarter ended March 31, 2022, DDI’s total operating expenses decreased 14.4% year-over-year to $60.80 million. The company’s net cash flow from operating activities increased 28.8% year over year to $28.38 million. In addition, total assets increased by 1.9% to $988.19 million, compared to the value of $969.81 million for the year ended December 31, 2021.
For the fourth quarter ending December 31, 2022, DDI’s EPS and revenue are expected to increase 1,080% and 1.7% year-over-year to $4.13 million and $87.75 million , respectively. The stock has gained 5.6% over the past month to close the last trading session at $10.50.
DDI’s POWR ratings reflect this strong outlook. The stock has an overall rating of B, which equates to a buy in our proprietary rating system.
It has an A rating for value and sentiment and a B for stability and quality. Within the same industry, it is ranked first. Click here to see DDI’s ratings for growth and momentum.
PLTK shares were trading at $11.73 per share on Friday afternoon, down $0.37 (-3.06%). Year-to-date, PLTK is down -32.16%, compared to a -12.58% rise in the benchmark S&P 500 over the same period.
About the Author: Shweta Kumari
Shweta’s deep interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make informed investment decisions. After…