Investing in Gaming Stocks – A Complete Guide

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The gaming industry is quite a powerful and promising industry in terms of investments. If a game wins the heart of the masses or if a gaming console acquires elite status in the gaming community, your investments quadruple in days and nights. But if the game never sees the light of the day, all your investment goes down the drain.

It’s promising and risky. If you’re interested in investing in gaming stocks anyway, this guide is for you. Over here, we’ll guide you about everything you need to know before getting into gaming stocks. So, let’s dive in!

 

Reasons to Invest in Gaming Stocks

Before proceeding any further, you ought to be clear about your choice. So, determine whether you should be investing in gaming stocks or not. And if you haven’t got the slightest of ideas why you’re doing this, then here are a few reasons to invest in gaming stock:

  • In 2020, the video game industry generated a revenue of $155 billion.
  • We expect the video game industry to generate a revenue of more than $260 billion by 2025.
  • By 2024, half the planet will comprise gamers.

Hence, any investments in the video gaming industry will only multiply. But, of course, for the best results, you have to be smart with your investments.

Read on to figure out how to make the best gaming stocks decisions.

 

Types of Video Game Companies for Stock Investments

 

First, figure out the company you wish to invest in. There are four different types of companies in the video game industry. These include:

  • Software Companies
  • Hardware Companies
  • Game Designing Companies
  • Publishing and Distribution Companies
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By the rule of thumb, it’s best to divide your assets and invest in multiple companies. You can invest in different companies within the same type or different companies in different types.

Even better, it’s best to invest in a company with all four departments. Some of your best options are:

  • Sony
  • Microsoft 
  • Activision Blizzard
  • Tencent Holdings
  • Nvidia

These are the biggest names in the gaming industry that create video games and consoles from scratch and deliver the finished product to the market. These are the names that spark trends in the video gaming industry. And hence, they also generate the largest revenues.

If you prefer in-person supervision of your assets and close monitoring of the company you entrust, look for a local video game company that’s completed successful video game projects.

 

How to invest in gaming stocks?

Investing in gaming stocks begins with determining how much money you wish to invest in the gaming stocks. You can determine this amount based on four factors. These include:

  • Available funds
  • Existing & Upcoming Financial Opportunities
  • Financial Goals
  • Tolerance for Risk

All of these factors are highly variable and vary from individual to individual. However, by the rule of thumb, we recommend setting up the maximum possible amount without impacting your current & upcoming expenditures. If you’re investing for the first time, go slow. Invest a little amount and test if you’re getting the hang of it. Once you’re confident about your understanding, invest a big amount for profits. 

You will not be able to execute the step above without knowing how to invest in gaming stocks. So, here’s a quick review of your three possible options:

  • Contract for Difference (CFD)
  • Exchange-Traded Fund in Gaming Stocks (ETF)
  • Real Game Shares of Gaming Companies
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You can determine which of these methods will best suit you here in this guide about CFD VS ETF. As for the real game shares, it gives you the possession and associated property rights. It also reduces the risk and gives a stable regulation with zero swap fees. However, there’s a lack of opportunities for short positions.

Once you’re done deciding the best method, determine whether you wish to opt for a publicly-held company or a privately held company. Ideally, it’s best to go with a publicly held company. But to invest in a publicly held company, you will have to wait for its IPO (Initial Public Offering). For example, those interested in investing in Epic Games (a promising video game company) await the Epic Games IPO. It may take some time, but you’ll know you’re investing your assets in the right place.

Now that you’re through with all your planning and homework, it’s time to invest. You can do it in three simple steps, including:

  • Opening a trading account
  • Downloading trading platform
  • Begin making deals

 

Final Thoughts

Although you’ve done your share of research and are all set to begin with your career as an investor in gaming stocks, we’ll still ask you to consider the risks involved. For example, you might want to consider the laws. Check out the trend of your government’s policies and trends concerning the video game industry. Determine if they support it or not. And base your decisions on factual evaluations. Good luck!