We recently compiled a list of the 8 Best Esports Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Roblox Corporation (NYSE:RBLX) stands against the other esports stocks.
The Future of Esports: Emerging Trends and Market Potential
The esports sector is experiencing significant growth and transformation, driven by evolving trends and increased investment. According to The Business Research Company, the global esports market was valued at $1.63 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 16.4% during 2024-2028 to reach $3.48 billion by the end of the forecast period.
Technological advancements continue to shape the future of esports. The integration of generative AI in gaming is creating more immersive experiences, while cloud gaming continues to gain traction. As these technologies evolve, they are expected to enhance player engagement and expand the esports audience.
Another key trend is the rise of live streaming. This also offers exciting avenues for both content creators and advertisers looking to connect with a dynamic audience. Comscore’s 2024 State of Gaming Report revealed that gamers spent 45 billion hours on online video content in 2023.
Esports and live streaming are gaining traction, particularly among younger generations. The report shows that about 86% of Gen Z and 80% of Millennials who are aware of esports have watched it. Additionally, 53% of Gen Z and 61% of Millennials have engaged with live streaming. The report also highlights that 79% of viewers prefer watching esports with others. This indicates the social nature of esports.
The rise of platforms like Twitch and YouTube Gaming has made esports more accessible, further fueling interest and participation.
Additionally, the Middle East is emerging as a significant market for esports, thanks to initiatives like Saudi Arabia’s Vision 2030, which aims to diversify the country’s economy. Major events, such as the Esports World Cup held in Riyadh, have drawn thousands of participants and substantial prize pools, showcasing the region’s potential. Here’s a short excerpt from our previous article “7 Best Gaming Stocks To Buy Now” that discusses this in more detail:
“In July and August, the first-ever Esports World Cup took place in Riyadh, Saudi Arabia, attracting over 1,500 players and offering a massive prize pool of $60 million. The event spanned eight weeks and included 23 competitions across 22 different video games, such as Call of Duty and Fortnite.”
Overall, the esports sector is poised for continued growth. As organizations adapt to new market dynamics and leverage innovative technologies, the future looks promising for investors interested in this vibrant industry.
Methodology
To compile our list of the 8 best esports stocks to buy according to hedge funds, we used the Finviz and Yahoo stock screeners to find the largest gaming and esports companies. We also reviewed our own rankings and consulted various online resources. We carefully verified our list to remove any companies that can not be classified as esports stocks. Next, from an initial pool of more than 20 esports stocks, we focused on the top 8 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 8 best esports stocks to buy are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A person taking lessons through Roblox Education, expanding their knowledge and skills.
Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 54
Roblox Corporation (NYSE:RBLX) is a leading American video game developer that ranks among the top 3 on our list of the best esports stocks to buy according to hedge funds. The company created Roblox, a versatile gaming platform that lets users design, share, and play games made by other users. With free access to millions of games, Roblox generates revenue through in-game purchases using its virtual currency, Robux. This model not only attracts a large player base but also encourages developers to create engaging content, as they can earn Robux that can be converted into real money.
In 2021, Dubit, a game studio focused on the Metaverse and esports, raised $8 million to launch the first live esports league in the Metaverse on Roblox. This initiative highlights the growing interest in competitive gaming within virtual environments. Additionally, Roblox hosts numerous community-run esports tournaments, further establishing its role as a key platform for esports engagement.
In Q2 2024, Roblox Corporation (NYSE:RBLX) reported strong financial growth, with revenue reaching $893.5 million, a 31% increase year-over-year. The platform saw a record 79.5 million average daily active users, reflecting a 21% growth from the previous year. These impressive metrics highlight the platform’s popularity and engagement, making it an attractive investment.
The company is also expanding its offerings beyond gaming. During the Q4 2024 earnings call, management shared that Roblox Corporation (NYSE:RBLX) is venturing into e-commerce by partnering with Walmart to test shopping experiences within the platform. The company’s diversification into social interaction, shopping, and education enhances its business model.
Hours engaged hit a record 17.4 billion in Q2 2024, up 24% compared to the same period in the previous year, with significant growth in key markets like Japan and India. With its strong user engagement and ongoing expansion into new areas, Roblox Corporation (NYSE:RBLX) presents a compelling opportunity for investors looking to increase their exposure to the esports market.
The combination of a robust gaming platform and innovative business strategies positions Roblox Corporation (NYSE:RBLX) for continued growth in the dynamic gaming landscape. According to Insider Monkey’s Q2 2024 database, 54 hedge funds held stakes in Roblox Corporation (NYSE:RBLX) as of the second quarter.
Overall RBLX ranks 3rd among the best esports stocks to buy according to hedge funds. While we acknowledge the potential of RBLX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RBLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
