The video game industry has experienced tremendous growth over the past decade. When 2020 began, I’d suggested that investors should look to get in on this space. Nearly a year from that point GameStop had captured the imagination of traders in early 2021.
However, I have my eyes on another TSX stock in the gaming space instead. Let’s dive in.
Why GameStop spiked and stalled in June
GameStop languished in single-digit price territory this time in the previous year. The stock soared to an all-time high of US$483 in late January 2021. Its run was fueled by social media-inspired investors who aimed to manufacture a short squeeze.
They were largely successful to kick off the year, as hedge funds took massive losses. The video game retailer was thought to be dead in the water, especially in the face of the COVID-19 pandemic.
Shares of GameStop started to gain momentum again in late May and early June. However, this run petered out by the middle of the month. This reflected a broader stall that may have indicated some fatigue after a year-long bull run in major North American markets.
GameStop has attracted some hype as management hopes to drive into the e-commerce sector. However, its foray is in its very early stages.
I’ve got my eyes on a TSX stock that has put together a great performance over the past year.
Here’s a TSX stock in the gaming space that has also surged
Earlier this month, I’d suggested that investors should look at Enthusiast Gaming (TSX:EGLX)(NASDAQ:EGLX) instead of GameStop. The Toronto-based company is engaged in the media, content, entertainment, and esports businesses around the world. Shares of this TSX stock have climbed 64% in 2021 as of early afternoon trading on June 29.
The company unveiled its first quarter 2021 results on May 12. It delivered revenue growth of 321% compared to the previous year. Moreover, gross profit jumped 80% to $5.9 million. Enthusiast reported 9.9 billion total views across its written and video content. Meanwhile, it scored partnerships with Samsung and TikTok.
Enthusiast was also ranked in the top 100 Internet properties in the United States by Comscore. It was one of two gaming properties to make the list, along with Amazon’s TWITCH.TV. This TSX stock is well-positioned in this fast-growing sector.
The future of e-sports is bright this decade
Heading into the 2010s, the video game industry was booming but was still relatively niche. Over the past decade, it has managed to expand its demographic reach beyond the young adult male cohort. Audience numbers for esports are expected to exceed 600 million by 2022. Total global revenues rose above $1 billion in 2019. Nearly 40% of those revenues were generated in North America.
This is all good news for this TSX stock going forward. Instead of betting on GameStop’s uncertain foray into e-commerce, investors should bet on what looks like a sure thing in Enthusiast Gaming.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon.