Best Gaming Stocks Under 10: Video games are hot in 2020, following widespread municipal lockdowns that left people of all ages stuck at home with not much left to do.
Over 2.7 billion gamers are expected to spend $160 billion on gaming in 2020, despite the absence of major conferences like E3 and supply chain issues caused in a year of new consoles launching.
That’s not all – many esports leagues shut down, as hosting virtual events makes it virtually impossible to ensure fair competition. Still, people are flocking to games in record numbers, pushing a lot of these stocks to gain value.
There are plenty of hot video game stocks, but many of them cost $60 and up, just like blockbuster games themselves.
This makes it as hard to find a great value stock in the gaming sector as it is to find a great gaming deal. It’s not impossible though, and this guide will explain how to find the best gaming stocks under $10.
Let’s start with explaining why video games are such a good investment in the first place.
Are Gaming Stocks A Good Investment?
Video games encompass a wide array of different niches a casual gamer may not be aware of. Aside from video game developers and publishers, there are businesses involved in esports, computer hardware, furniture, lighting, streaming, and more.
Each of these businesses can be a great investment, proven to generate a lot of revenue. PewDiePie, for example, has an estimated net worth upwards of $30 million from an empire he built off “Let’s Play” videos on Minecraft before branching out.
Even the Luxor in Las Vegas turned its famous pyramids on the strip into a permanent Esports Arena in partnership with HyperX and Allied Esports. Then there are the franchises whose intellectual property generate massive revenues for the companies that own them.
Mario and Pokemon combined have generated over $50 billion in revenue since their inceptions. Pac-Man, Call of Duty, Space Invaders, Street Fighter, FIFA, and Final Fantasy are among the franchises that have earned over $10 billion.
These days, there are different revenue models for games across a larger variety of platforms and devices than ever. You can play games on a dedicated console, your PC, mobile devices, a virtual reality headset, a smart TV, and more.
While some companies charge $60 and more up front, freemium revenue models propelled franchises like Candy Crush, Fortnite, and League of Legends into multi-billion-dollar earnings too. Fortnite even found itself hosting virtual concerts during the COVID-19 crisis.
Two gaming stocks stand out as values in this environment, and they’re on the other end of the spectrum from esports in casual gaming.
Zynga Users Hit 100 Million Per Game
Early Facebook games were rudimentary and most legacy game developers largely ignored the platform back in 2007.
This gave Zynga (NASDAQ:ZNGA) the lane it needed to showcase its lineup of games, including Zynga Poker, FarmVille, Mafia Wars, and Words with Friends. Zynga’s games became the first to reach 10 million daily active users on the Facebook platform, reaching upwards of 100 million users for each game.
As mobile gaming expanded in the 2010s, Zynga expanded beyond Facebook to include games in the Google Play and Apple App stores.
The late 2000s and early 2010s were easily Zynga’s heyday, and it remained relatively quiet heading into 2020 when the coronavirus pandemic hit. Suddenly gaming experienced a spike again, and people flocked to social games in large enough numbers to gain the company nearly 50% in value while the S&P 500 only grew 4% in the same timeframe.
Of course, that only benefitted the company because it has been busily acquiring popular mobile developers, like Small Giant Games, Gram Games, and Peak Games, which it bought for $1.85 billion.
These slick moves give analysts a positive outlook for Zynga, in fact saying it’s undervalued at anything below $12 in 2020.
Glu Mobile Spent $7.8 Billion Acquiring
Zynga isn’t the only company profiting from our love of casual mobile and web-based games. Glu Mobile (NASDAQ:GLUU) not only creates mobile games like Diner Dash and Deer Hunter Classic, but it also partners with high-profile licensees for games like Kim Kardashian: Hollywood, MLB Tap Sports Baseball 2019, Aqua Teen Hunger Force, Call of Duty, and Monopoly.
This helped the company save up a war chest of cash that it used to continue buying gaming companies to expand during the coronavirus shutdowns.
In fact, Glu spent $7.8 billion on acquisitions and investments during the second quarter of 2020. The moves are helping the company gain stock values, so long as they (along with the new in-house games being developed) generate revenues.
A lot of this may depend on how much we stay glued to our mobile phones playing games, but its chances of doing so are good, if its biggest shareholder Tencent Holdings (OTCMKTS:TCEHY) means anything.
The company is responsible for Dungeon Fighter Online, one of the most successful games of all time, and also owns Riot Games and has a 40% stake in Epic Games.
This puts Glu Mobile in elite company, and its membership of this clan could propel it to large gains in 2020 and beyond.
Best Gaming Stocks Under $10 Summary
Video games are only getting more popular in 2020 as people of all ages get stuck working and going to school virtually. It’s only natural to seek a virtual escape, and there are two companies who are experts at providing exactly that.
Both Glu Mobile and Zynga are established companies that have proven they can deliver on some of the most competitive gaming platforms on the planet – Facebook and mobile.
While consoles like the Xbox Series X and PlayStation 5 grab all the headlines, it’s those freemium mobile games that are earning all the money. If you’re looking for a great value stock under $10, mobile gaming is the first place to start looking.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.