Anyone even vaguely aware of the gaming world knows that Fortnite is one of the most popular games ever, and the company that created the gaming goliath is Epic Games. The company challenged Apple in court over the iPhone maker’s payment system and the 30% commission fee it charges software developers. While some feel that the judge on the case could render a split decision in the bench trial, she has indicated that she remains troubled by monopolistic forces at work in the iOS ecosystem, but acknowledged that federal courts do not run businesses.
However, others take the stance that the judge will rule in Apple’s favor, as the law appears to be on the tech giant’s side. In a new research report, Stifel’s gaming analyst Drew Crum makes the case that if the judge does rule in favor of Epic Games, some of the top video game stocks would get a huge boost. The research report noted this:
The Epic versus Apple trial hearings concluded just a few weeks ago, and a decision is expected within the next few months. Epic has challenged the 30% platform fee Apple charges for all in-app purchases (IAPs) through its App Store (Note: Google’s take rate for IAPs via the Google Play Store is also 30%). Hence, the ruling in this case could have meaningful implications for mobile game publishers. At this point, our estimates do NOT contemplate any adjustments to the take rate going forward, nor do we attempt to predict the likelihood of such an outcome. With that said, we see a broader shift towards lower platform fees, providing a gross margin tailwind for relevant industry participants over time, all else being equal.
Four top gaming stocks are rated Buy at Stifel. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This remains a top gaming pick on Wall Street, and it is on Stifel’s Select List of top stock picks. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide.
The company develops and publishes interactive entertainment software products through retail channels or digital downloads and downloadable content to a range of gamers. Its legacy franchise Call of Duty continues to be hugely popular.
Investors receive just a 0.51% dividend. Stifel has a $121 price target on the shares, which is well above the $92.53 Wall Street consensus target. The last Activision Blizzard stock trade on Tuesday was reported at $95.27, which was down over 3% for the day.
This stock has pulled back nicely from its 52-week high and is offering an outstanding entry point. Playtika Holding Corp. (NASDAQ: PLTK) develops mobile games in the United States, Europe and elsewhere. The company owns a portfolio of casual and casino-themed games. It distributes its games to the end customer through various web and mobile platforms, such as Apple, Facebook, Google, and other platforms, including its own proprietary platforms.
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