Opportunities Abound as the Video Game Sector Prepares to Shrink

Microsoft (MSFT) made its biggest acquisition offer yet, with the proposal to buy Activision Blizzard (ATVI) at $95 per share. Judging by how the share prices of both companies have moved, the market isn’t quite satisfied that such a merger will go through.

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  • However, a few other names in the video game space have had a selloff on the news. Whether a deal pans out between the two companies or not, these other firms will likely recover in time and continue to trend higher.

    One big mover has been Sony Group Corporation (SNEJF). The Japanese electronic conglomerate has seen shares drop 11 percent in just two days on the merger news. While the merger could impact the number of exclusives dropping on Sony’s PlayStation consoles, such a potential change is years away, if ever.

    The drop makes the conglomerate look like a reasonable play on the future of consumer electronics right now. Shares trade at 19 times earnings, and revenue has risen 13 percent in the past year. With PS5 consoles still facing production issues, the company likely has more upside ahead when sales can increase.

    Action to take: Investors may like shares of the company here, given the valuation and the firm’s dominant position in the global consumer electronics market. Shares yield 0.5 percent at current prices, which isn’t huge, but could grow in time.

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  • This is truly a stock to buy for US investors, as shares trade over-the-counter rather on a major exchange that allows for options trading.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.