5 Gaming Stocks to Watch

Gaming stocks struggled in 2023, with the theme down 7.9% in the past six months through 16 January, according to OPTO’s thematic ETF screener. However, 2024 looks set to be a better year for the space. Here is a collection of gaming stocks to watch in 2024.

• Nintendo’s share price hit an all-time high in Tokyo on mounting speculation over the Switch 2 console.
• Unity Software is to lay off a quarter of its workforce; approximately 1,800 jobs will be lost.
• Sega Sammy has announced an organisational restructuring as part of its ‘transmedia’ strategy.

Nintendo

The All-Time High Stock

Nintendo’s [NTDOY] shares hit an all-time high in Tokyo on 10 January, amid mounting speculation over the Japanese gaming giant’s next console, the Switch 2, which is expected to launch later this year. Also driving the rally is “oil money”, according to Nikkei Asia, referring to Saudi Arabia’s sovereign wealth fund Public Investment Fund (PIF), which became Nintendo’s biggest foreign shareholder in 2023, having built up an 8.6% stake. PIF also recently purchased shares in gaming rival Koei Tecmo [TKHCF].

Unity Software

The Layoff Stock

Unity Software [U] is laying off a quarter of its workforce — approximately 1,800 jobs — according to a Reuters report on 8 January. “We are … reducing the number of things we are doing in order to focus on our core business and drive our long-term success and profitability,” interim CEO Jim Whitehurst wrote in a memo to employees. The Unity share price has fallen 15.4% since the start of 2024, although it’s up 9.6% in the past year.

Netmarble

The Leadership Change Stock

Netmarble [251270:KS] has nominated the company’s Vice President Byung Gyu Kim, as co-CEO, pending approval at the games publisher’s upcoming shareholder meeting. Kim’s expertise in “overseas affiliate management and strategic planning, [will] contribute positively to Netmarble's new changes and growth,” stated a press release. Netmarble narrowed its net loss in Q3 2023 to ₩28.4bn, from approximately ₩278bn in the year-ago quarter and ₩437bn in Q4 2022.

Tencent

The ByteDance Discussions Stock

Tencent [TCEHY] could be set to buy ByteDance’s video game operations — the Tik Tok parent company is in discussions with multiple potential suitors, according to Reuters. While Tencent didn’t respond to the news agency’s request for comment, it reported in November last year that ByteDance is looking to restructure its Nuverse gaming division and move away from mainstream games. China’s gaming regulations weighed heavily on gaming stocks in 2023, with the Tencent share price down 22.2% in the past year and down 17.3% in the past six months.

Sega Sammy

The IP Opportunities Stock

Sega Sammy [SGAMY] announced a major organisational restructuring last week, including the formation of Sega Fave, which will combine its amusement and toys businesses. The move is part of the company’s ‘transmedia’ strategy to find growth opportunities in gaming, animation, merchandising, licensing — much like it’s done with its Sonic the Hedgehog IP. “In the various entertainment scenes of modern society, the value of seamless experiences from the digital to the physical and real world is expanding greatly,” stated Sega in a press release.

Another Way to Invest in Gaming

The Roundhill Video Games ETF

The Roundhill Video Games ETF [NERD] holds Nintendo, Unity, Netmarble and Sega as of 15 January. As of 31 December, 52.1% of the portfolio was allocated to consoles, while digital/online gaming and mobile/portable gaming had weightings of 24.4% and 17.5%, respectively. PC gaming accounted for 5.5%. The fund is up 12.3% in the past year through 16 January and down 0.6% in the past six months.

The VanEck Vectors Video Gaming and eSports ETF [ESPO] holds Nintendo, Unity and Tencent as of 15 January. As of 31 December, 58.9% of the portfolio is allocated to communication services, 29.5% to information technology and 11.5% to consumer discretionary. The fund is up 22.8% in the past year and down 3.1% in the past six months.