In an article for the Motley Fool, Keith Noonan breaks down 3 stocks in the video game industry that are strong buys in February, including one that we recommended back in November:

Activision Blizzard 

Engagement for video games trounces pretty much every other form of media. The interactive nature of games means they captivate a player’s attention, and that’s a big advantage in a world where competition for consumer eyeballs has never been more fierce.

When it comes to shaping the world of interactive entertainment, few companies have played a bigger role than Activision Blizzard . The company is an industry leader that looks poised to continue delivering wins and rewarding long-term shareholders.

The company’s core franchises include genre-defining properties such as Call of Duty, World of Warcraft, and Candy Crush Saga. The company also has perhaps the industry’s single best track record of launching and sustaining new hit properties. It combines a powerful force of development studios and marketing expertise, and it will likely continue to play a leading role in the shaping the industry’s growth.

Activision Blizzard also pays a dividend, and the company has been building an impressive payout growth streak despite the stock’s yield looking relatively small. Shares yield roughly 0.4% as of this writing, while the payout has grown over 170% since the company first initiated its dividend in 2010. Its ability to raise its payout each year is a testament to the company’s consistent profitability, and it looks like Activision Blizzard still has a long runway for dividend and share price growth.

Ubisoft 

It’s been an interesting few years for Ubisoft . The France-based video game publisher missed opportunities with some key releases in 2018 and 2019, but the business has battled back from rough patches and shown it has staying power.

Solid execution over the last year and a variety of tailwinds stemming from the coronavirus pandemic have recently prompted solid performance for Ubisoft stock. The company’s share price has climbed roughly 32% over the last year, and the publisher now has a market capitalization of $12.4 billion.

For a company with proven franchises and development studios, that valuation looks too conservative, and there’s a good chance that Ubisoft stock will surge at some point over the next few years. The company has proven that franchises, including Assassin’s Creed, Rainbow Six, and Ghost Recon have longevity, and it has the resources to deliver new hit series and pursue growth opportunities in mobile, esports, and augmented reality.

The game maker is valued at approximately four times this year’s expected sales and 29 times earnings — levels that look quite reasonable in the context of the company’s solid foundation and growth potential.

Glu Mobile 

Glu Mobile  is a maker of free-to-play mobile games that are geared toward casual players. The small-cap company is worth just $1.5 billion, and it trades at less than three times 2021 sales estimates and 17 times forward earnings. With its own underappreciated individual strengths and the overall video game industry likely to enjoy sustained growth, Glu could blow past its current valuation even if it doesn’t manage to hit any home runs with new releases in the near future.

Thanks to the strength of core franchises, including Design Home, Covet Fashion, and MLB Tap Sports Baseball, management anticipates that bookings will grow between 8% and 10% this year without any contribution from new releases. The company also has four new games set to release in 2021, but the market has underestimated the sturdiness of Glu’s existing lineup. That creates an opportunity for investors.

In addition to new releases and content updates for its existing titles, Glu will likely be making some acquisitions moves in the near future. The company closed out the third quarter with $318 million in cash against zero debt, and management has indicated that it’s in the process of identifying outside development studios that can help push the company’s growth to the next level.

With shares trading at affordable multiples and diverse avenues for the company to outperform expectations, Glu Mobile looks like another buy in the gaming industry.

Source: https://www.fool.com/investing/2021/02/04/3-top-video-game-stocks-to-buy-in-february/

While the evolution of cloud gaming is going to take some years to fully establish itself as a key revenue source in the global games market, some major companies have already begun transitioning with the digital shift; focusing more on subscription based services and digitally downloadable games.

Electronic Arts (EA)  and Microsoft  have both taken strides in expanding their subscription based services with EA Play and Xbox Game Pass respectively, even collaborating together with EA Play being offered on Xbox Game Pass.

Both EA Play and Xbox Game Pass have the same intentions at the heart of their operations; making more games accessible for consumers at a lower but recurring cost. Instead of paying a certain amount for each individual game that a consumer purchases, these services allow them to pay a monthly or yearly fee in order to have access to a wider range of downloadable games.

The shift is real, and for EA they see it happening with some of their top games already as released in their November earnings presentation:

• 56% of units sold through are now digital rather than physical, measured on Xbox One and PlayStation 4 over the last twelve months
• After eight weeks of Madden NFL 21 sales, digital accounted for 66% of units sold
• After the first three weeks of FIFA 21, the number was 50%

Source: https://s22.q4cdn.com/894350492/files/doc_financials/2021/q2/Q2-FY21-Earnings-Slides-Final.pdf

And while EA Play has been successful on its own, reaching over 6.5 million subscribers, now launching on Xbox Game Pass will expand its reach and audience even further, as CEO Andrew Wilson said during the November conference call: “We believe we have the opportunity to double our subscriber base over the next 12 months.” Xbox Game Pass only launched in September, and has already amassed 18 million subscribers, which is a testament to Microsoft’s global reach and products offered.

With EA Play entering the fold, it will surely be beneficial to both services. By making EA Play available on Xbox Game Pass, EA is trying to gain a larger audience by offering its games to a wider consumer base which Game Pass has already established. EA’s main bookings and revenue generation comes from ‘live services & other’ which comprises of all their offerings besides the full game which can include subscriptions, in-game purchases, and other services, its after the games are purchased when EA begins to generate serious revenue. This isn’t EA giving up EA Play freely just because Microsoft is the bigger company, this will bring more consumers to EA Play and the games offered through it, in turn generating further revenue once the players own the games. EA Play is now also available on Steam, which last year had over 120 million users. Through these two platforms, EA is going to reach a much broader audience than it ever could by itself, and creating more interest in its products and future releases.

EA is going in the right direction by focusing on establishing their digital presence and gaining the consumer base needed to be successful in this inevitable cloud gaming shift.

One company to look at is Unity Technologies . Unity has only been public since September of 2020, but since, its share price has risen over 100%. Unity isn’t the traditional gaming company you would typically look to invest in. It doesn’t have the fancy, as well known name, as their primary business is software development and video game development tools.

Unity provides a variety of software for game developers and content creators to use. And this is what makes them such an intriguing investment going forward. Travis Hoium put it perfectly in his article for the Motley Fool: “It’s the platform Unity has built that will be valuable long-term, and it’s stickier than any game by itself because Unity’s customer is the video game developer”. Unity doesn’t have to rely on each individual game to be profitable, as long as the video game industry as a whole continues to grow, Unity’s products will be needed and wanted.

Source: Newzoo

And as it stands that looks to be the case. Newzoo estimated that the the global games market generated US$159 billion in revenue in 2020, and is expected to reach the US$200 billion mark by 2023.

As the gaming market grows, so does the number of people, specifically developers who try to get in it. Yes, Unity’s main customer base features game developing titans like EA , Nintendo , Take-Two Interactive , and Zynga , for starters, but it also features tools that don’t require heavy coding which helps less experienced developers build games and get into the market.

It isn’t just gaming that Unity builds products for. They are consistently investing in building opportunities outside of gaming, in industries like architecture and engineering with 3D design capabilities, automotive designs, and the animation film industry with 3D tech.

These next stats show Unity’s reach both inside and outside the gaming industry:

• Used by 8 out of the top 10 architect, engineering design and design companies in the world
• Used by 9 out of the top 10 automotive companies including Honda, Volvo, and BMW
• 53% of the top 1,000 mobile games in Apple’s App Store and Google Play have been created using Unity’s solutions
• Approximately 90% of the content on emerging AR platforms is made using Unity engine
• 94 of the top 100 global game development companies are Unity customers

Source: https://seekingalpha.com/article/4397153-unity-software-long-term-winner

Source: https://seekingalpha.com/article/4397153-unity-software-long-term-winner

Unity’s growth for the long term will continue to hinge on the increase in their large customer base. Each quarter has seen an increase of the number of customers that generate over US$100,000 in revenue for them, with the current growth rate of the industry, this uptrend is one that should continue.

While Unity has yet to achieve operating profitability due to its continuous investing in R&D and marketing, that does not mean they aren’t fundamentally strong financially. Their operating margin and revenue both drastically improved in Q3 2020 compared to Q3 the year prior, and through the first 9 months of 2020 their free-cash-flow improved by just over US$60 million.

Unity  has positioned itself well for the long-term. Through the expansion of their business operations and strong customer base within the gaming industry, Unity should be a strong play for years to come. Even with significant investment into other industries, they will still be primarily connected with gaming. If you believe in the growth rate of the gaming industry, then you can have faith in Unity too.

With the gaming industry shifting towards a nearly complete digital world, many people, including us at GamingStreet were unsure about GameStop’s future. The new Xbox and PlayStation consoles both featured versions without disc drives, signalling that this could be the beginning of the end for video game discs, and in turn the retailers that sell them.

GameStop’s price target was on average in the US$12-15 range, and now is blowing that mark out of the water. The question people keep asking is how is this happening? Well, simply put; Reddit. It is home to endless amounts of day traders, and once these groups of people got word of others trying to short the stock, they put that to an abrupt halt. Allison Morrow of CNN put it best: “Note to short sellers: I didn’t think I needed to say this in 2021, but internet mobs are unpredictable, ruthless, and relentless.”

Since GameStop  went public in 2002, 100 million of the shares have been traded in one day, all three have happened in the last two weeks. It is truly remarkable was has transpired here. It goes against all the fundamentals of investing; they have had five different CEOs since 2017, sales and profit margins continuing to fall, and aren’t expected to turn a profit until 2023.

This just further proves the power of the internet, as the stock price continues to be volatile, where it goes next is extremely unclear. In the end, GameStop remains questionable from a fundamental perspective, and if the price drops down to the target average, the shares will lose more than 80% of its value.

Three Pillars Strategy

Source: https://esportsentertainmentgroup.com/wp-content/uploads/2020/11/GMBL-Investor-Deck-11.14.pdf

EEG operates its business based on a three pillar strategy: Esports Entertainment & Infrastructure, Esports Wagering, and iGaming & Traditional Sports Betting. All three pillars work in synergy to provide the best products possible for both consumers and investors.

Jaycee Tenn of Benzinga outlines each of the pillars:

1. Esports Entertainment and Infrastructure – the first pillar consists of EGL (tournament platform), Helix eSports (entertainment center), ggCircuit (cloud-based software for gaming centers), and Genji (esports analytics provider)
2. Esports Wagering – the second pillar consists of both Vie.gg (esports wagering platform and LANduel (player-vs-player video game wagering platform)
3. iGaming & Traditional Sports Betting – the third pillar consists of Argyll Entertainment (traditional sportsbook & iGaming) which operates under the brands SportNation and Redzone.bet

Strategic Partnerships

2020 was a big year in terms of partnerships for EEG , mainly in the traditional sports arena:

• Philadelphia Eagles – NFL
• Philadelphia Union – MLS
• LA Galaxy – MLS & LA Kings – NHL

All the partnerships were formed in order for the teams to find new ways to connect with their fans in a unique way. EEG will host branded tournaments for the teams to interact and engage with their fanbases, in an effort to also show the appeal of how esports and traditional sports can coincide with the same group of people. Especially with the previous and upcoming seasons for these teams allowing limited or no fans at all, teams needed to find another way to engage with their audiences, and EEG is a perfect way to do so through the different assets and products they have acquired. As we see more big name brands use esports and gaming to connect with potential consumers, the same goes for professional sports organizations and leagues. They all want to keep growing their consumer base and global audiences, and right now this is the industry that can do that.

They also previously partnered with Allied Esports  to launch the VIE.gg CS:GO Legend Series tournament, which was a great success overall. The tournament caused a 400% increase in registered new users and a 300% increase in customer deposits for VIE.gg during the two-week tournament period compared to the prior two weeks.

Key Acquisitions

It was not just those partnerships that caused EEG to have a big year, and some of those partnerships would not be possible without some of the key acquisitions they made in 2020:

Helix eSports & ggCircuit

• Helix eSports operates five gaming centres in the US, including one located in Massachusetts in partnership with the Kraft Group that is home to the Boston Uprising of the Overwatch League
• Helix also merged with Team Genji, an esports analytics company that already has an existing relationship with FIFA and the NBA 2K League
• ggCircuit offers a cloud-based management system, tournament platform, and integrated point-of-sale solutions for enterprise customers
• Their network contains more than 1,000 connected locations, with clients ranging from GameStop, Dell, Best Buy, and Lenovo among countless others

Argyll Entertainment

• Online sportsbook and casino operator with the UK and Irish markets
• Acquisition includes flagship gambling brand SportNation.bet

Esports Gaming League

• Provider of live and online esports events and tournaments
• Services include full turnkey esports events, live broadcast production, game launches, and online branded tournaments
• Will be used in the partnerships with the major professional sports teams to run their tournaments and events

Lucky Dino

• A Malta licensed online casino operator
• Bring in over 30,000 monthly active players

These acquisitions should help EEG leverage the esports betting and tournament growth. They are now able to meet their customers needs globally through esports tournaments, events, betting, and casino play. Together, it will lead to higher interest and engagement from consumers, possible investors, and partners which is evident through some of the new partnerships that were formed based on these acquisitions. Their moves have enabled them to hit each pillar of their business strategy, and it all seems to be coming together for EEG going forward.

Esports Entertainment Group has not reached its full potential. Still a small cap organization with their market cap currently sitting under US$100 million, there is substantial room for growth in this market, and with these new partnerships and acquisitions set to be a part of the organization for a full year for the first time, 2021 could be a big one for EEG. They have firmly committed to their three pillars business strategy going forward, and have made massive decisions under that guidance for the future. Now might be the right time to get involved as esports betting continues its rise globally, and EEG is set up to go along with it.

Enthusiast is excited to announce that it has signed an integrated sponsorship deal with @Samsung. The multi-platform sponsorship will utilize the breadth of #EGLX’s reach in the coveted Gen Z and Millennial demographics. #gaming #esports https://t.co/wAeu6yVwQE

— Enthusiast Gaming (@WeAreEnthusiast) January 18, 2021

They have announced a new multi platform sponsorship deal with Samsung. The partnership is to leverage media advertising, custom content, esports sponsorships, influencer marketing, and entertainment activations across Enthusiast’s diversified fan engagement platform. This will include:

• Product placement and promotional activity with team influencers and brand ambassadors, including during live streamed content,
• Luminosity Gaming team sponsorship, including logo placements on team jerseys and at various entertainment activations,
• Custom content integrations within certain Enthusiast media Web and You Tube properties,
• Logo placement on social media channels,
• Display media advertising across Enthusiast media channels,
• Sponsorship of 2021 EGLX event

Enthusiast  is the largest gaming media network in North America with its 300 million monthly users across all their platforms. Their users are spread out across three divisions: media, events, and esports, and Samsung has hit each of these aspects in their deal. Utilizing Enthusiast’s media capabilities with their 100+ different web platforms and 1,000+ Youtube channels for advertisements and content integrations, sponsoring EGLX 2021, the largest gaming expo in Canada, and lastly sponsoring their esports team; Luminosity Gaming, which features some of the top teams and creators in the world such as xQc, Muselk, Tori Pareno, and Fresh.

CEO Adrian Montgomery had this to say on the deal: “We are thrilled to announce Samsung as an Enthusiast gaming partner and to work with them across our suite of integrated media, esports and entertainment assets to create awareness and drive share for their leading PC offerings, exclusively designed for gamers. It is an honour to work with Samsung, a global leader in electronics, and to have their logo on our Luminosity jerseys.“

Recent Headlines

In November, they announced their plan to list on NASDAQ, a natural step forward for Enthusiast Gaming  as they have received immense interest from investors both in the United States and internationally.

Back in December, they were ranked 7th on Forbes’ list of most valuable esports companies for 2020. Going from unranked the year prior to 7th is a steep improvement in itself, but there is a case that they should be even higher. Given the fact they have the highest estimated revenue total on the list, as well as their various avenues they use to generate that revenue besides esports, it could be seen that Enthusiast Gaming is the most valuable esports company, instead they received the lowest multiple due to their lower percentage of revenue tied to esports, which was used to estimate the valuation of each company multiplied by their revenue.

This isn’t Enthusiast’s only major partnership over the last couple of months. During the US Presidential election, they were enlisted by the Biden-Harris campaign in an effort to target gamers to go out and vote. Leveraging their roster of talented and popular influencers and creators, they were able to drive voter engagement through Fortnite maps. With 65 million of their 300 million monthly users residing in the US, the goal of the partnership was to be able to reach Gen Z and Millennial demographics, which comprises 70% of Enthusiast’s audience, making this a great way for the Biden-Harris campaign to connect with potential voters.

Enthusiast Gaming  keeps growing their audience and their partnership portfolio, making them one of, if not the most intriguing gaming company for 2021 and beyond. It will be great to see how this new Samsung sponsorship unfolds, and what else they have in store together for the future.

Bragg Gaming is an innovative online gaming solution provider, and with its primary asset ORYX Gaming, they offer a turnkey solution for retail, online, and mobile iGaming platform, and an advanced casino content aggregator, sportsbook, lottery, marketing, and operational service.

CEO Adam Arviv and newly appointed board member Paul Godfrey shared their thoughts on the news, as well as what it will do for Bragg  going forward:

“Uplisting to the Toronto Stock Exchange was one of my immediate goals when stepping into the CEO role,” said Arviv, adding “It’s a significant milestone in our growth strategy, and we’re pleased that our strong performance has allowed us to make the move to the senior market.”

“The listing on the TSX will generate increased awareness among institutional and global investors and will put the company squarely in the sights of major industry analysts,” Godfrey said, “As the global online gaming industry continues to expand at an exponential rate, investors are looking for companies with the technologies and expertise to lead the way, and Bragg is a prime example.”

This hasn’t been the only substantial news involving Bragg Gaming in January, as last week they announced a partnership with global online betting and casino operator, Betway. The deal includes Betway using ORYX Gaming’s entire RGS portfolio that includes games such as GAMOMAT, Kalamba Games, Givme Games, Golden Hero, CandleBets, Peter & Sons and Arcadem.

For a growing company in an emerging market this was the next step needed. With their recent partnership with Betway, along with the increased awareness to potential investors and other companies from the uplisting, Bragg is set up well to continue their growth.

In the gaming industry there are 4 main ETFs to look into: GAMR , ESPO , NERD , and HERO . Still considered by many to be an up and coming industry, especially in terms of investing within it, one or more of these ETFs might be a safe way to start. It gives an investor the opportunity to get their foot in the door of the industry, and then being able to dive into individual stocks once they have a stronger understanding of the gaming market.

GAMR

The Wedbush ETFMG Video Game Tech ETF: GAMR features holdings in over 90 different organizations that support, create, or use video games. Their stocks are separated into three different buckets; pure-play, non-pure-play, and conglomerate. The pure-play stocks are hardware and software game developers that generate their revenue solely on products in the gaming industry. Non-pure-play are the companies that support the pure-play organizations as they generate part of their revenue from the gaming industry but they do not only rely on it. Lastly, the conglomerate bucket is comprised of companies whose business models support the gaming industry. The first two buckets make up the majority of the ETF at 90% while the conglomerate bucket holds just 10%. GAMRs top holdings only account for roughly 21-22% of the total assets which makes this ETF safe as no individual stock has enough weight to bring down the entire fund. GAMR meets all the major global markets, with around 30-31% of their holdings in Asia, 25% in Asia-Pacific, 25% in North America, and 19% in Europe.

Some of their holdings:

• Bilibili Inc 
• Codemasters Group Holdings 
• GameStop Corp 
• Keywords Studios 
• Embracer Group 
• Nintendo Co 
• Capcom Co 
• Corsair Gaming Inc 
• Stillfront Group AB 
• Gravity Co 

ESPO

VanEck Vectors Video Gaming and Esports ETF: ESPO holds a portfolio made up of companies that are related specifically to video games and esports. All the organizations in the portfolio generate at least half of their revenue from the video game and esports industry, including; game development, software or hardware, and streaming services. They also have holdings in esports league operators, distributors, and platforms. Compared to GAMR, ESPO has a more concentrated group of holdings with only 26 total assets in its portfolio, with about 1/3 of them in North America, between 55-60% based out of Asia and Asia-Pacific, and lastly just over 10% from Europe.

Some of their holdings:

• NVIDIA Corp 
• Tencent Holdings 
• Advanced Micro Devices 
• Bilibili Inc 
• Sea Ltd 
• Nintendo Co 
• NetEase Inc 
• Activision Blizzard 
• Take-Two Interactive 
• NEXON Co 

NERD

Unlike the other ETFs listed, Roundhill BITKRAFT Esports & Digital Entertainment ETF: NERD  focuses solely on esports, with its portfolio comprised of companies that generate revenue from esports or esports related business activities. Those include: video game publishing, video game development, video game streaming platforms, organizing video game tournaments and/or events, operating and/or owning video game leagues, owning competitive video game teams, and gaming hardware and technology companies. Similar to GAMR, the stocks in the portfolio have three different classifications: pure-play, core, and non-core. If you are looking to get involved in only esports compared to the rest of the gaming industry, NERD is a great place to start.

Some of their holdings:

• Corsair Gaming Inc 
• Tencent Holdings 
• HUYA Inc 
• Activision Blizzard 
• DouYu International Holdings 
• Modern Times Group (MTG) 
• Bilibili Inc 
• Skillz Inc 
• NetEase Inc 
• AfreecaTV 

HERO

The final ETF on our list, Global X Video Games & Esports ETF: HERO , is actually fairly similar to ESPO with its portfolio having holdings in stocks related to video games and esports. HEROs holdings are companies whose principal business functions have or are expected to have significant exposure to both the video games and esports industries. Like ESPO once again, the eligible companies must generate at least 50% of their revenue from video game or esports activities, on top of meeting minimum market-cap and liquidity requirements. Where HERO differs is that they have holdings in 41 companies, with a larger emphasis in the mobile games sector in terms of publishers and developers, which is the largest segment in the global games market.

Some of their holdings:

• Bilibili Inc 
• Sea Ltd 
• Nintendo Co 
• NVIDIA Corp 
• NetEase Inc 
• Activision Blizzard 
• Capcom Co 
• NEXON Co 
• Electronic Arts Inc 
• Take-Two Interactive 

Source: https://s22.q4cdn.com/894350492/files/doc_financials/2021/q2/Q2-FY21-Earnings-Slides-Final.pdf

GameStop is a distributor for the larger corporations like EA , but with the shift towards digital, those companies no longer have the same need for a distributor and for the most part can provide their products directly to the customer without taking a hit in revenue and net bookings.

As provided in their latest Q2 Earnings Presentation back in November of 2020:

• 56% of units sold on the Xbox One and PlayStation 4 over the last 12 months were digital
• The first 8 weeks of Madden NFL 21 sales were 66% digital
• The first 3 weeks of FIFA 21 sales were 50%
• Each were 14 point increases from the year prior

EA believes this is likely a structural change. Even though it was driven by the pandemic and lockdown measures, this trend seems to be becoming a reality. Going even further in this digital shift, is the revenue takeover by their ‘Live services and other’ section compared to ‘Full game’. Live services includes subscriptions, advertisements, esports, and game software, essentially everything besides the actual games themselves. Revenue fell 14% compared to Q2 the year prior, but what really stands out is the 51% decrease in ‘Full game’ revenue and the 13% increase in ‘Live services and other’. Games themselves are becoming less and less popular amongst gamers, and within that, more are going digital and just purchasing the games for download instead of physical copies.

This possible downturn has been coming for a number of years now for GameStop . As an organization geared towards brick-and-mortar in a world that keeps moving towards becoming more digital, it only makes sense that since 2015 their net sales have been dropping and their net (loss) has fallen off significantly.

Unfortunately for GameStop it isn’t just some of the financial numbers that have taken a downturn. Possibly the most public news about GameStop has been their store closures, which have been at an alarming rate since 2019. Mentioned in their Q3 2020 presentation and report, they have closed 800 stores since 2019, and were expected to reach 1,000 by the end of 2020. This was only natural like countless other businesses during this unprecedented year, but this has been a trend for GameStop for 5+ years.

GameStop still has time to ride the wave of the new console meanwhile. The new console cycles typically last around 6-7 years, as PlayStation 4 and Xbox One both released in 2013. The scary part about the latest console releases is that there was a version released for both PlayStation and Xbox that did not feature a disc drive. It is possible that we have seen the end of disc drives for these consoles.

So, is there still hope for GameStop? Well they are certainly giving investors some with their latest partnership with Microsoft . The deal is centred around two main points: Firstly, GameStop will be using Microsoft’s back-end and in-store solutions through its Dynamics 365 platform to better meet customer needs. This will give GameStop employees real-time data for all customer needs regarding things like inventory and purchase history, while the Microsoft Surface products will enable employees to have immediate access to all the data, pricing, and insights the system will make available. The second part of the deal, which went unnoticed by many is that GameStop will receive a percentage of any digital game download, downloadable content, micro-transaction, or paid subscription generated from Xbox, as long as that console was purchased through GameStop.

This deal gave new life to GameStop, even though it might not have the revenue impact they will need to grow, it has certainly done its job in intriguing investors and increasing the stock price. This deal shows that GameStop is still here and ready to fight to keep building and moving forward.

Source: https://news.gamestop.com/static-files/ba37d1f0-c350-4dbb-b91a-4f58de46b95a

GameStop Reboot is a process that began in August 2019 with a focused effort on stabilizing core business operations. From their achievements so far in this process, the digital first e-commerce platform can be what really saves them. A store that was solely built on brick-and-mortar and has relied on in-store purchases, the shift to digital won’t be easy and will take some time.

Is it time to sell GameStop? For some that answer is yes, but for now it might be best to hold and see what GameStop  has in store for the new year and beyond, and how the stock will react. With the most recent console cycle just beginning, combined with their new Microsoft partnership and e-commerce focus, GameStop might not be done just yet but it is definitely an uphill battle.

Cathie Wood, doing what she does best, picking winners.#SKLZ #CathieWood #ArkInvest pic.twitter.com/95Cr21To6d

— Benzinga (@Benzinga) January 5, 2021

Cathie Wood; Founder, CEO, and CIO of ARK Invest  and one of their ETFs; ARK Next Generation Internet ETF purchased 215,000 shares of Skillz  this week.

Skillz is a mobile games platform that allows players to connect through competitions and tournaments. It gives franchises the opportunity to connect their players through a new form of gameplay. They are tailored for the smaller to midsized developer so those companies can generate revenue and build franchises without resorting to selling to a larger corporation or relying on selling advertising space. Consumers pay tournament fees, with the majority effectively going to the developers and Skillz retaining 14%.

Mid December, just prior the calendar turning over, Skillz went public via a special-purpose acquisition company (SPAC) called Flying Eagle Acquisition Corporation. Operating on the NYSE under the symbol ‘SKLZ’, experienced a strong start to its public domain.

So, why is it so important that Cathie Wood and ARK Next Gen bought into Skillz for an amount equating to just 0.07% of ARK’s holdings? Well the proof is right in front of us: Skillz stock increased over 20% since it was made public, and whenever ARK and Cathie Wood purchase shares of a stock, investors tend to follow, continuing to contribute to the stocks gain.

Currently, Skillz runs about 1,700 tournaments per second, and features an audience of roughly 2.7 million users per month. With over 10 million developers and 2.7 billion gamers globally in the mobile games sector, Skillz is primed to continue growth. The mobile games market is the largest in the industry, reaching an estimated US$86 billion in revenue in 2020. It has a lower barrier to entry compared to the other markets, and Skillz perfectly caters to the ease of that for both the players and developers.

Revenue grew over 90% over the last year, and heading into 2021 Skillz has US$250 million in cash and no debt. They estimate by 2025 the mobile gaming market will reach a value of US$150 billion, roughly doubling where it is at now. With top investors like Cathie Wood buying in, Skillz seems like a strong company for the future.