Acquisition rumors heat up with mobile gaming companies - The Average Joe

    Acquisition rumors heat up with mobile gaming companies

    Victor Lei β€” Head of Research

    July 14, 2021

    gaming companies acquisition rumor

    July 14, 2021

    Investors want one of two things: to have their stocks turn into meme stocks, or get acquired for a big premium. In the gaming industry, acquisition rumors are louder than ever.

    Too big to ignore: Mobile gaming

    With 55% of US residents gaming during COVID, the gaming industry experienced massive growth. One area grew particularly fast β€” mobile gaming, which grew 40% from its pre-pandemic levels. With lockdowns ending, that growth is expected to diverge even further:

    • PC/console game sales are expected to decline as consumers head out.
    • Mobile gaming is expected to keep growing.

    For game developers, moving into the mobile market opens up a massive market β€” one strategy bring to make a mobile version of existing franchise games:

    • Riot, owned by Tencent (OTC:TCEHY), released its popular League of Legends game on mobile late last year.
    • Activision (NASDAQ:ATVI) expects to release a mobile version of its Diablo franchise in 2021.

    In just over 20 years, mobile gaming took control of over 50% of the $165b gaming market β€” powered by advancements in mobile technology. Today, mobile gaming has become too big to ignore.

    Playing our part by spreading the gossip

    In such a hit-driven industry, there’s one way to get ahead β€” acquiring successful game studios. In the past couple years, we’ve seen big acquisitions with Activision buying King (Candy Crush) and Tencent buying a majority stake in Supercell (Clash of Clans).

    2020 was no different with the industry in acquisition mode:

    • Microsoft acquired game developer ZeniMax, in a blockbuster deal, and was reportedly trying to buy Discord in 2021.
    • 2020 became a record year with over 220 gaming companies acquired.

    And now, the acquisition rumor mills are spinning again… A May report by CFTN mentioned game developers, Zynga (NASDAQ:ZNGA), Ubisoft (OTC:UBSFY) and Take-Two Interactive (NASDAQ:TTWO), as top buyout candidates. Industry sources say those with less than $15b in market cap are the likely targets.

    In recent weeks, a report by Betaville says Zynga received buyout interest β€” but this is mere chatter.

    Investors: Playing the guessing game

    Acquisitions are complicated and it often takes hundreds of starter conversations to lead to a deal β€” with rumors mostly leading to nothing.

    Trying to guess which companies get acquired is a tough game to play. You’re better off looking for strong companies β€” and if something you own gets acquired, consider yourself lucky.

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