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Summary
- Remote working and social distancing norms have favoured online gaming during the lockdown
- These businesses are expected to witness increased consumer engagement during the second lockdown as well
- Gaming stocks have delivered astonishing price returns during the first lockdown, most of these companies are expanding their presence in the trans-Atlantic region
Gaming has emerged as a preferred form of entertainment as the coronavirus crisis unfolded. With people forced to remain indoors, the trend of online gaming has become popular to keep them engaged. Industry experts suggest online gaming is the fastest growing market, and it is evident from the fact that the gaming markets have doubled in size globally in recent times. Remote working and social distancing norms have favoured online gaming during the lockdown. The UK has a rich history when it comes to gaming. During the industrial revolution, horse-betting picked up pace in the UK. Since then, the industry has evolved to betting and gaming through online platforms.
The onslaught of coronavirus pandemic has weighed heavily on the traditional forms of entertainment such as movie theatres or entertainment zones. Britons have therefore resorted to online gaming as they can connect virtually with friends.
Also read: How Digital Gaming is Adding Value for Two Consumer Service Players: Gamesys Group & Rank Group?
In this article, we will put analyse some gaming stocks that can be kept an eye on during the second lockdown.
- Team17 Group Plc (LON:TM17)
The Gaming company delivered a resilient performance during the first half of 2020. The company expects revenue and adjusted EBITDA to exceed the market expectations in the fiscal year 2020. The Gaming company has signed 10 additional new games due for release in years to come. During the heightened crisis, the company delivered strong performance across its portfolio of multiplayer and online games.
The company’s revenue grew by 28 per cent to £38.8 million during the first half of 2020 (H1 FY19: £30.4 million). The Group’s gross profit was up by 21 per cent to £18.3 million in the first half of 2020 (H1 FY19: £15.1 million). The company’s gross profit margin stood at 47.3 per cent during the first half of 2020.
The company achieved record growth of 28 per cent in its profit before taxation, which stood at £13.3 million during H1 FY20. The cash position of the company improved to £50.4 million during the first half of 2020.
TM17 shares traded at GBX 710 on 5 November at GMT 11:45 AM+ 1. The shares of the company delivered an astonishing price return of around 82 per cent, from January to till date.
- Playtech Plc (LON: PTEC)
The online gaming software provider, Playtech is hoping to deliver strong performance in the near term. The company is banking on a recently signed contract with a leading provider of Live Casinos in the region.
During the six months period ended 30 June 2020, the company has been expanding its footprint by forging relationships with the customers and adding new brands. Playtech has entered the New Jersey market with the long-standing strategic partner bet365 and has signed agreements in Guatemala and Costa Rica. Overall, the company has gained a solid momentum and will continue to focus on expanding its reach beyond borders in the long-term.
The company has a strong balance sheet, with a robust liquidity position. The Gaming company has shown significant progress in the US and Latin America region by adding 50 new brands during the first half of 2020. The company possesses strong trading and cash generation abilities and is well positioned to navigate through the challenging trading environment.
PTEC shares traded at GBX 359.60 on 5 November at GMT 11:50 AM+ 1. Since the lockdown in March, the shares of the company delivered an astonishing price return of 134 per cent.
Also read: Popular Gaming Stocks of the United Kingdom
- GVC Holdings Plc (LON:GVC)
United Kingdom-based sports betting and gaming business, GVC Holdings Plc estimates EBIDTA impact of £43 million in case all retail outlets are closed for a whole month in the wake of second national lockdown. The FTSE 100 listed global sports-betting and gaming Group has been awarded four sports-betting licences for the bwin, SportingBet, Ladbrokes and Gamebookers brands by the German regulator in October.
During the third quarter of 2020, the Group’s net gaming revenue was up by 14 per cent on a constant currency basis. The company’s online net gaming revenue was up by 28 per cent on constant currency and also achieved double-digit growth in the consecutive quarter for the nineteenth time. The online gaming volumes were ahead of pre-pandemic levels, reflecting the resilience of the business models. The company is going from strength to strength in the US markets as it rolls out BetMGM across new states.
GVC shares traded at GBX 979.60 on 5 November at GMT 11:55 AM+ 1. The shares of the company delivered a double-digit price return of more than 19 per cent in the last one year.
- Gaming Realms Plc (LON:GMR)
The mobile games developer, Gaming Realms, had recently launched its Slingo Originals content in association with Paddy Power Betfair, betting and gaming division of Flutter Entertainment Plc (LON:FLTR).
The game developer aspires to develop Slingo games based on NetEnt's renowned IP and has, therefore, signed a multi-year licensing agreement with NetEnt, a leading provider of premium gaming solutions to online casino operators. Slingo Starburst would be the first game to be launched next.
Due to an increase in distribution and expansion of gaming portfolio, the company’s licensing revenue was up by 104 per cent to £3.4 million during the first half of 2020. Also, due to an increase in new Slingo content being produced, the social revenue was up by 29 per cent to £1.8 million during the period. The coronavirus lockdown has helped the revenue streams of the company.
GMR shares traded at GBX 20.60 on 5 November at GMT 11:57 AM+ 1. The shares of the company delivered a triple-digit price return of more than 157 per cent in the last one year.
The coronavirus crisis has proved to be a boon for the online gaming businesses as they have recorded astonishing growth during the lockdown. The gaming businesses are expected to carry their dream run through the second half of the fiscal year in the wake of a second lockdown and consistent rise in the number of coronavirus cases.
