Sector comment: “Gaming as a Safe Haven”
Digital Entertainment, and in particular Gaming, has become one of the safer bets since the coronavirus outbreak. Admittedly, stocks in this sector have plummeted like the rest of the global stock market but not in the same degree. According to Redeye, this is a healthy sign in an overall unhealthy market. Gaming companies will likely benefit when more and more people are quarantined around the world. The world’s biggest platform for PC-games, Steam, has increased in popularity the last weeks, and in China, the mobile game spending increased significantly during the outbreak. Despite the low impact on the business, the shares in many gaming companies have crashed. We find that the price declines are related to a lower investor risk appetite and sentiment in general, and not to the earnings prospects of the companies. Thus, we view gaming as a safe haven and will likely see an increased investor interest when the first dust settles from the major market correction we have just witnessed.
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