During the COVID lockdowns, few industries did as well as video games. Now, with a potential recession on the horizon, one Wall Street analyst believes they could be winners yet again.
Gerrick Johnson, an analyst at BMO Capital Markets said, “Video game stocks were deemed ‘Covid winners’ in 2020, then ‘reopening losers’ in 2021. We think they could be ‘recession winners’ in 2022 for many of the same reasons they had been Covid winners two years ago.”
With prices for almost everything on the rise, and a possible economic downturn the horizon, Johnson notes how “Video games are one of the lowest-cost forms of entertainment… and look at these stocks as areas of defense in a very uncertain economic environment.”
Should the economy enter recession, as many economists believe, the likelihood of more consumers staying at home and seeking alternative entertainment, like video games, grows.
Such was the case in 2020. The pandemic helped propel the video game industry into the mainstream, with its global userbase and sales reaching all-time records (until now). In the US alone, video game sales reached $56.9 billion, having increased by 27% over the pre-pandemic year of 2019.
Many consider the video game industry to be “recession proof”, meaning economic downturns may not affect sales and user growth as negatively as they do other industries.
Its why savvy investors may already be taking positions in video gaming companies, both publicly traded and private…
And large tech companies have been acquiring smaller video game developers and studios at a record pace.
Whether a recession hits in 2022 or 2023 (or at all), the video game industry is red-hot, and many forecasts show it could remain so for the foreseeable future.
Read more about Gerrick Johnson’s comments on the video game industry, HERE
Or discover video game companies that may be a good investment, HERE
Source: Video Game Stocks Could Be ‘Recession Winners’ | Investor’s Business Daily (investors.com)