Gaming Stocks rises as other industries struggle to contain fall amid global lockdown

As the world reels under the economic setbacks of nationwide lockdowns, stock markets around the world have tumbled to their lowest levels since the great depression. This sudden downturn has exposed various industries to a bleak future of negative growth or even shutting down altogether. Even though the Stock markets around the world are nosediving, the stocks of gaming companies have fared well and have achieved some of their best numbers during this time period.

Gaming consoles where visitors can try out the “Fifa 19” video game are seen at the booth of EA Sports during the Gamescom convention on August 22, 2018, in Cologne, western Germany. – The international trade fair for interactive games and entertainment runs until August 25, 2018. (Photo by Christophe Gateau / dpa / AFP) / Germany OUT

While the governments around the world mull upon opening their countries, the current crisis has benefited gaming companies as the demand for gaming has grown exponentially. Given that more people are confined to their homes, many have moved towards gaming as their primary form of entertainment. With a 70% surge in video game usage during peak hours and a staggering 34% y-o-y increase in gaming spends, the gaming companies are positioned to fare well during and after the current crisis.

Companies such as Electronic Arts, Take-Two, Activision-Blizzard, Nintendo, Zynga, etc all have grown more than 15% average since 16th march, 2020. Investment trust managers have argued that the gaming industry still has significant room to grow and with many of the stocks viewed as undervalued, they are seizing the opportunity to invest.

Although many might argue these gains are temporary, at the same, we should remember that the gaming investment is set to pick up in current quarter in order to develop new games, especially keeping in mind the arrival of next-generation consoles from both Sony and Microsoft in holiday season 2020. The gaming demand is expected to increase with many experts claiming the global gaming market to expand 27% between 2019-2022. These trends in the gaming industry largely explain the movement in stock prices and their current rally in stock markets around the world.