Gaming Stocks to Perform Better in Q4 of 2021

Gaming Stocks to Perform Better in Q4 of 2021

The COVID-19 pandemic and its resulting restrictions have had far-reaching impacts, particularly on the gaming and entertainment industry. While lockdowns saw temporary closures for the casino industry, online gaming saw a boost thanks to consumers’ search for alternatives. As a result, casinos have started to negotiate partnerships with online gaming studios. The transition from physical to virtual tables however, hasn’t gone as smoothly as originally expected.

The Original Online Poker Boom

Online gaming has not grown this much since the poker boom in the 2000s, which unearthed some of the greatest poker players of all time. At the time, televised Texas Hold’em tournaments and popular poker-themed movies promoted the game to never before seen levels of popularity. As expected, multiple poker gaming sites started to emerge everywhere, recruiting a considerable number of players that duplicated almost every year.

Gambling During the Pandemic

The restrictions brought by the lockdown at the beginning of the pandemic had a negative impact on gambling. Casinos faced raising costs due to the implementation of COVID-19 safety protocols. At the same time, seating capacities were reduced, limiting the number of players allowed inside casinos.

As a consequence, many companies reported extraordinary losses. Nevertheless, knowing that the demand was still out there, casinos thus started to consider alternative methods of reaching customers.

A Partnership with Mixed Results

In order to reverse the upset brought by the pandemic, gambling companies started partnering up with online game studios to find alternative sources of revenue. Mixing casinos’ decades of experience with gaming studios’ abilities to encourage online spending seemed like a no brainer. The results, however, have been mixed to say the least.

Gambling companies have struggled to report profits for Q3. Caesars reported a loss of $1.08 per share, while DraftKings and Penn National Gaming are expected to post an 87 cents-a-share loss and a drop of 20% respectively. The results seem a bit surprising considering that many companies still expect an increase in sales for 2021. The gambling business appears to remain profitable, but stocks have not been as reliable as expected.

Gearing Up for a Comeback

The situation may soon be improving, however. After the release of COVID vaccines, the number of cases and fatalities has lessened considerably. As expected, this led to a gradual lifting of restrictions, including for casinos. At the same time, the start of the NFL’s season and the MLB’s World Series means that sports fans will have multiple opportunities to bet on their favorite teams.

There are other positive factors to consider. US states like New York and Michigan have passed bills legalizing online sports betting. Florida and California have yet to make it legal, but the industry remains optimistic. All things considered, regardless of the initial losses observed during Q3, Q4 2021 is starting to look a lot more promising.

At the moment experts are optimistic, but recommend caution nonetheless. Lockdowns can always make a surprising return, and online gambling legalization is a complex process that can take years. Monitoring pandemic related restrictions as well as the state of gambling regulation is essential before investing in online gaming stock.

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