Esports Stocks Gain Interest From Retail Traders
If you’re among the millions of new traders looking for top penny stocks for your watch list right now, you’re not alone. Thanks to the unbridled hype fueling momentum in meme stocks, the risk-on appetite is apparent among retail traders. But before jumping headfirst into the sea of Reddit-boosted names, it may be worthwhile to take a step back and observe some trends.
I’m not here to sway one way or another. But only looking at popular penny stocks on social media isn’t the only way to find new trends. Sure, the rising tide lifts all ships, as they say. But what about identifying the actual current before the tide comes in? What I mean by this is doing a little research can help traders identify emerging trends. We saw this early in the summer last year when electric vehicles took the market by storm.
Then, as the masses continued flocking to EVs, other traders saw an emerging trend in alternative energy stocks like solar and hydrogen. However, when identifying new trends early, it’s worth noting that it may seem like a lonely market to be looking at. Millions of Redditors aren’t clamoring for exposure (yet). But remember to read between the lines and understand what could become potential catalysts.
Esports Penny Stocks Gain Interest
Thanks to the pandemic, Esports has emerged as one of the more popular forms of entertainment. Early on in 2020, there weren’t any sports to bet on or live events to watch. Gaming, however, began to build a base. This wasn’t just from a user base perspective but a viewership one, in general. Of course, your market leaders like Activision Blizzard (NASDAQ: ATVI) & Electronic Arts (NASDAQ: EA) were popular companies discussed by the masses. But there are many more Esports stocks to watch than just those.
Awareness of Esports continues to rise. There has been a flood of new interest in the industry since 2015. Just slightly more than 800,000 people had heard about it at that time. These numbers soon changed. Right now, Newzoo finds* that nearly 2 billion people are well aware of the industry itself, with over 660 million making up the active live streaming audience.
Meanwhile, revenues from competitive gaming are set to be just shy of US$1.1 billion by the end of this year, according to market researcher Newzoo. Furthermore, names like Michael Jordan, Drake, Mark Cuban, Shaquille O’Neal, Alex Rodriguez, Ashton Kutcher, and even Jerry Jones have started investing in the space. Though it is not the current flavor of the week among Redditors, there could be a few penny stocks to watch as the Esports trend emergers.
- Alpha Esports Tech Inc. (CSE: ALPA)
- Enthusiast Gaming (TSX: EGLX) (NASDAQ: EGLX)
- Elys Game Technology (NASDAQ: ELYS)
Alpha Esports Tech Inc. (CSE:ALPA)
Alpha Esports Tech Inc. debuted earlier this year. The company has begun implementing a multi-pronged approach that includes esports, mobile gaming, and eCommerce. Its portfolio is built on the backbone of products like its GamerzArena, setting the stage for a new type of competitive experience. According to the company, GamerzArena boasts over 100,000 active users and a rapidly evolving ecosystem.
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Furthermore, the company has also pointed out that it focuses on key partnerships in sports, entertainment & education. Alpha Esports has cited relationships with The New Jersey Devils, The Vancouver Whitecaps, Barstool Sports, ESPN Radio, Devil Child, Oxygen Esports, Notre Dame, Syracuse University, Penn State, University of British Columbia, University of Rochester, Western Michigan University, and others.
What To Watch With Alpha Esports
The company’s platform is based on building an active community of dedicated gamers. Not only can they play and watch games alongside their peers. They can compete in tournaments to earn prizes through daily tournaments. Furthermore, the expansion of its GamerzArena+ membership plan has presented another potential line of revenue to monetize its user base further.
In particular, Alpha’s relationship with the Vancouver Whitecaps FC gives exposure to 40,000 members of the Whitecaps’ youth development league. Aside from their eligibility to become GamerzArena+ members (at $12.99/ month per member), the partnership also presents Alpha Esports Tech Inc. with sponsorship revenue, additional user acquisition, and future collaboration according to the company.
Adding to its series of partnerships and collaborations, Alpha signed a deal with Spartan Athletics at the end of May. This is the athletic arm of Trinity Western University. Interim CEO, Matthew Schmidt explained, “We feel our previous work with Esports programs in Simon Fraser University, University of British Columbia, and University of Victoria will be key in helping us establish a long term relationship with Spartan Athletics, and we look forward to leveraging their large network to further increase our presence with universities and colleges, as well as our user base on GamerzArena.”
Enthusiast Gaming (NASDAQ: EGLX) (TSX: EGLX)
While Esports have begun gaining momentum outside of the market, other companies like Enthusiast Gaming have seen significant progress inside the stock market. In this case, EGLX stock has managed to climb from around $1 in Q4 of last year to highs this year of $8.88USD. Similar to most tech stocks, EGLX shares consolidated in April and May. Right now the Esports stock sits just outside of the penny stock range hovering around $6.60USD.
The company boasts as the largest gaming media platform in North America. It reaches over 300 million monthly video game and esports fans worldwide. Similar to Alpha, Enthusiast has gone down the road of partnerships. It partnered with ExitLag at the end of April wherein ExitLag will use Enthusiast’s wide reach as ExitLag debuts in the US with a proprietary technology to improve routing connections for gamers.
What To Watch With Enthusiast Gaming
Last month was an even more active one for the company. Not only did Enthusiast close on the acquisition of Icy Veins (one the largest independent Activision Blizzard fan communities), it also sped up the launch of its subscription-based social network for gaming, Project GG. In connection with Project GG, Enthusiast agreed to acquire another company, Tabwire, which owns TabStats to provide technology and data for gamers to see game data in real-time.
Aside from these newly established acquisitions, Enthusiast has realized significant growth over the last year. In its first-quarter update, the company highlighted the revenue growth of 321% compared to Q1 of 2020. Gross profit climbed 80% during the same period, and subscription revenue saw a boost of 50% compared to the same period last year.
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“Our first-quarter results were fueled by our focused acquisition strategy as well as organic growth gains coming from direct sales and premium subscriptions,” commented Adrian Montgomery, CEO of Enthusiast Gaming, in the company’s Q1 financial update.
Elys Game Technology (NASDAQ: ELYS)
Finally, Elys Game Technology has been one of the Esports penny stocks discussed previously. Similar to Enthusiast, ELYS stock saw a strong surge from Q4 of 2020 to mid-Q1 of this year. The penny stock jumped from under $1.40 to over $8.20 within just a few short months. This came as gaming started to gain interest in the market.
The last few months have seen consolidation in the stock. However, that hasn’t put a pause on Elys and its business plan. The company has made noticeable progress over the last year. In fact, in its most recent financials, Elys reported record annual revenue for 2020. Furthermore, in Q1 2021, the company recorded a 39% increase in revenue over the same period last year. Concerning the company’s betting arm, Elys’ web-based gaming turnover increased by 150% over the same period last year
What To Watch With Elys Game Technology
Moving forward, company management has placed a stronger focus on iGaming (betting online) with regard to Esports. In an interview last month, Elys Chairman Michele Ciavarella explained, “Our go-to-market strategy is to begin with land-based channels and then evolve to mobile platforms. We’re not competing against the bigger online sports-betting companies who buy all the advertising. Our strategy, especially in D.C., is to provide technology and know-how to ground locations who want to run a sportsbook. Everything from casinos to convenience stores. We want to help them serve their loyal customer base.”
Heading into the first week of June, Elys could be one of the companies in focus. This is thanks to its planned presentation at the Summer Solstice Conference. In particular, Elys presents on June 2nd, and management plans on participating in one-on-one meetings with investors & analysts.
Esports Penny Stocks To Watch For 2021
Obviously, Esports and iGaming are emerging trends in the stock market right now. According to Market Insight Reports, the global esports betting market size is expected to gain market growth in the forecast period of 2020 to 2025, with a CAGR of 13.1%. From a revenue perspective, it’s expected to reach $13.05 billion by 2025.
Furthermore, industry comps already support the potential for rapid growth in esports companies. Keep in mind, however, that the early stages of any industry can be quite volatile. In this case, it’s important to do your research and understand numerous catalysts at play.
*NewZoo Data: https://newzoo.com/insights/trend-reports/newzoos-global-esports-live-streaming-market-report-2021-free-version
*Market Insight Reports Esports Betting Market Size: https://www.marketwatch.com/press-release/latest-study-explores-the-esports-betting-market-share-trends-growth-and-forecast-2025-2021-03-01
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