The viral pandemic that is COVID-19 is causing people around the world to be spending the vast majority of their days at home, naturally creating the perfect environment for gamers to increase their screen time, playing video games and still remaining social with friends—virtually.
The vast majority of business around the world are facing extreme uncertainty, as consumers are forced to stay at home, avoid contact with other people, and essentially wait for the viral panic to blow over. As people stay at home for extended amounts of time, more and more are turning to video games and esports as a means to entertain themselves.
Video Game Stocks Have Weathered the Storm
While it may seem counter-intuitive that a basket of communication services and technology stocks outperform during a de-risking selloff, that’s exactly what has happened over the last few weeks. On both a year-to-date basis and from the market top, video game stocks have outperformed broad equity benchmarks by a wide margin. How could this be?
Video game and esports stocks are uniquely positioned to weather this economic recession in which the vast majority of the population is forced to stay inside for extended periods of time. Across the spectrum of the industry, including live-streaming, esports competition and concurrent users playing, analysts have noted a significant increase in the number of people logging on to play video games. What are people going to do if they are stuck at home for an extended period of time on a mandatory lockdown? Play video games—with themselves and each other.
Source: Morningstar, Data as of 31 March 2020
John Patrick Lee joined VanEck in 2014 and is currently an ETF Product Manager focusing on video gaming, esports and international equities. His Responsibilities include business management of the existing ETF lineup, market strategy and positioning and product development. Prior to joining VanEck, John Patrick served as an Investment Advisor Representative with Dorsey Wright Money Management. He received a bachelor’s degree in English Literature from the College of William and Mary and holds a Chartered Financial Analyst® designation.
The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.