Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

If History Repeats, Video Game Stocks Could Soar 600%+

Companies / Gaming Jan 09, 2020 - 10:26 AM GMT

By: Stephen_McBride

Companies Justin Spittler : A new super cycle is revving up. And if history repeats, this super cycle will hand out profits of 8X to 18X, starting now.

If you’ve studied investing, you’ve likely come across the idea of “cyclical” assets. Cyclical assets go through boom and bust cycles. One year they surge in price, the next year they plummet.

Housing stocks are cyclical (read our recent guide on how to profit from the biggest housing boom in history), airline stocks are cyclical, gold is famously cyclical. Most commodities like oil, wheat, and steel are cyclical. Let me tell you about a new super cycle that was just born in a quiet corner of the markets.



I’m Talking About Video Game Stocks

Like other cyclical assets, the “video game super cycle” has everything to do with supply and demand. You see, a new generation of video game consoles comes out every five to eight years.

These new consoles run faster than previous versions. They feature better graphics and offer new games.

This isn’t just a big deal for “gamers.” It’s a mammoth opportunity for investors. During the last video game boom, you could have pocketed returns of 8X, 14X, and 18X in just six years!

Sony (SNE) Issued a Blockbuster Statement Two Weeks Ago

It said it will release its highly anticipated PlayStation 5 video game console next year. Microsoft (MSFT) will also introduce its “next-gen” console—code named “Project Scarlett”—just in time for the 2020 holidays. The video game industry has been waiting years for this news.

Sony last made an announcement like this in February 2013 when it unveiled the PlayStation 4. Eight months later, PlayStation 4 hit the shelves. Microsoft rolled out its own system, Xbox One, a week later. Since then, Sony has sold more than 90 million PS4s! Microsoft has sold 44 million Xbox Ones.

But These Tech Giants Weren’t the Biggest Winners of the Video Game Boom

Electronic Arts (EA), which makes the popular FIFA and Madden NFL video games series, soared 1,261% between 2012 and 2018.



Take-Two Interactive (TTWO) threw off even bigger gains. Take-Two is best known for its Red Dead Redemption and Grand Theft Auto game series. Its share price skyrocketed 1,665% during the last super cycle.



Activision Blizzard (ATVI), best known for its insanely popular Call of Duty series, posted the smallest gains of these three. It surged “just” 690% from 2012 to 2018.



These companies don’t sell consoles like Microsoft and Sony. They sell video game titles. These are the video game stocks you want to focus on.

You see, a new game console is a big investment. They cost around $400 to $500. A new game, on the other hand, typically costs about $50.

When someone drops $500 on a new video game system, they want to get their money’s worth. So, gamers typically buy a few video games right away. Avid gamers don’t stop there. They’ll buy dozens of new games to keep themselves entertained for years.

That’s why sellers of video games don’t just enjoy an initial boost in sales when a new console comes out. As long as they produce games people want to play, they keep collecting revenue for years and years as gamers keep buying new games.

Video Game Stocks Have Been Dead Money the Last Few Years

EA hasn’t approached its previous high since July 2018. Take-Two has gone nearly 15 months without setting a new high, while Activision peaked in October 2018. Keep in mind, the S&P 500 has set more than 20 all-time highs this year!

Why have video game stocks been “dogs” lately? It’s not because they’re bad companies, or because video games are no longer popular. More than 2.5 billion people play video games worldwide!

As I showed you, these stocks went ballistic for six straight years from 2012–2018. Then they ran out of steam. No major new consoles have been released since 2013, which made it hard to sell new games.

Video Game Stocks Are Entering a New Super Cycle

Now these stocks have “digested” their gains from the last super cycle, and they’re preparing to enter a new one. According to GlobalData, the video games market was worth $131 billion last year. By 2025, it’s projected to be a $300 billion industry. In other words, it’s set to nearly triple over the next few years!

But here’s thing. You should not wait until the new consoles hit the shelves to buy video game stocks. Now is the ideal time to buy in. According to the investment bank Cowen, Activision, Take-Two, and Electronic Arts beat the stock market by an average of 26% in the year leading up to the last three major console launches, which occurred in 2000, 2005, and 2013.

And it’s not like those were bad years for US stocks. The S&P 500 jumped 20% in 1999. It climbed 9% in 2004. And it rallied 13% in 2012! Yet video game stocks crushed the market in all three of those years. The market’s already starting to “price in” the coming video game super cycle.

EA has surged 31% since February—double the S&P 500’s return over the same period.



Take-Two has jumped 48% since February—beating the market by more than 3 to 1.



Activision is waking up, too. It’s climbed 46% since February—nearly triple the S&P 500’s return over the same period.



These are strong gains for such short periods. But these stocks are just getting started. All three are still trading well below their highs:



More important, video game super cycles don’t play out over a few months, or even a couple of years. They can last five years or longer!

The Great Disruptors: 3 Breakthrough Stocks Set to Double Your Money"

Get our latest report where I reveal my three favorite stocks that will hand you 100% gains as they disrupt whole industries. Get your free copy here.

By Justin Spittler

http://www.riskhedge.com

© 2019 Copyright Stephen McBride - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in