Video gaming was an industry that saw strong gains during the pandemic in terms of hours spent gaming and spending on consoles and games. Going forward, the sector continues to look appealing as monetization is increasing. Patrick Ryan looks at two video game stocks and decides which is the better buy: Zynga (NASDAQ:ZNGA) and Gravity (GRVY).Video games were one of the big winners during the pandemic as gaming surged. Many analysts believed that the total addressable market of the gaming industry may have permanently increased as many who started will become lifelong gamers. Of course, gaming is one of the most consumed forms of media, however, it's still in the early stages of monetization. Developers are getting more creative by offering premium in-game features and upgrades that are proving successful in getting gamers to spend money. Since the total market size is growing, there is plenty of opportunities in the sector beyond the well-known console and game developers. Below, we provide a quick look at two such stocks in Zynga (ZNGA) and Gravity (GRVY).
ZNGA develops, markets, and publishes social games primarily played on mobile devices. Though ZNGA games are not exactly epic adventures that prove indelible in the mind’s eye for years to come, they are fun distractions from everyday life.
ZNGA is riding high after its first-quarter earnings results impressed analysts and retail investors. The company's first-quarter adjusted EBITDA was an impressive $123 million. This figure is $55 million higher than that from the same quarter in the year prior. ZNGA's GAAP net losses dropped to -$23 million in the quarter from -$104 million in the same quarter last year. There are also some rumblings that ZNGA might be an acquisition target as the casual gaming crowd continues to serve as wind behind the company's sales.