Investing

3 Powerful Ways to Make Money with Epic Games Stock

By  TimThomas

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This post is part of a series on popular but unlisted companies. In the series, I’ve covered HuluSpaceXInstagramSubway, and Popeyes. In each post, I explain how, while investors can’t invest directly in the company, there are alternative investment vehicles available. Sadly for investors, investing in Epic Games stock is no different – the stock isn’t publicly listed but there are alternatives, and this post explains what they are.

Founded in 1991, Epic Games is an American MNC with headquarters in Cary, North Carolina, and more than 40 offices worldwide. Epic is now a renowned interactive entertainment company and 3D engine technology provider.

Epic Games creates and markets Hitman and Fortnite, one of the world’s most popular and fastest-growing massive multiplayer online (MMO) games. Many players and investors want a share of Epic Games (MMOGs). Epic Games reported that Fortnite has more than 350 million registered gamers. For those looking to acquire Epic Games stock and options in 2021, this makes it an interesting investment.

Parents are keen to buy Epic Games stock since they see how much money their children spend on Fortnite. Although Fortnite is free to play, Epic Games makes money by selling at $11.99 per month Fortnite Crew Experience membership that grants users access to more weapons and benefits.

However, Epic Games is not now available for purchase on the stock market because it is a private corporation that is not tradable.

History of Epic Games

Epic Games was set up in 1991 by Tim Sweeney as Potomac Computer Systems. It was initially set up in his parents’ house in Potomac, Maryland. The company was renamed Epic MegaGames, Inc. after launching its first commercial video game, ZZT (1991). In early 1992, they hired Mark Rein, currently the company’s vice president. The studio’s name was shortened to Epic Games once they relocated to Cary in 1999.

Epic Games owns and manages sub-studios in England, Seattle, Yokohama, Berlin, and Seoul; video game companies Chair Entertainment, Psyonix, Mediatonic, and Harmonix, and cloud-based software company Cloudgine. While Sweeney remains the company’s principal shareholder, Tencent purchased a 48.4% outstanding position in the company in 2012, corresponding to 40% of total Epic. It was part of a deal to transition Epic to a games-as-a-service model.

The company received further funding following the popular Fortnite Battle Royale’s release in 2017. Thus, allowing it to extend its Unreal Engine products, create export events centered on Fortnite, and launch the Epic Games Store. The company value is US$28.7 billion in equity as of April 2021.

Who Owns Epic Games?

Epic Games’ creator and CEO, Tom Sweeney, holds more than half of the company’s equity. Tencent Holdings, a Chinese company, is Epic Games’ second-largest shareholder (TCEHY). The world’s largest video game corporation, Tencent, owns almost 40% of Epic Games’ equity.

Epic Games’ most recent investment round, which closed in August 2020, raised $17.3 billion from private investors, indicating that the company can raise massive sums of money without issuing stock.

Is Epic Games Stock Listed?

Epic Games does have stock. However, it is a privately held company. Hence, as a retail investor, you will be unable to purchase Epic Games stock through a stock exchange or brokerage account. You will have to put your money into companies that own Epic Games stock.

Stock Price of Epic Games

Epic Games’ stock price is currently unknown because it is not traded on any stock exchange. Tom Sweeney, the company’s creator, Tencent Holdings, and other venture capital firms control 100% of the company. To purchase Epic Games stock, you must invest in Tencent Holdings shares.

3 Ways to Invest in Epic Games Stock

While you cannot buy EPIC Games stock as it is not publicly traded, there are three unique alternative investments.

1) Invest In Tencent Holdings (TCEHY: OTCMKTS)

There is a way to invest in Epic Games without having to wait for the company to go public. You can buy stocks of Tencent Holdings ADR (TCEHY: OTCMKTS). In 2004, Tencent went public in Hong Kong

Tencent Holdings is a Chinese multinational firm that many consider the world’s largest video gaming company. Tencent Holdings trades under the ticker symbol SEHK 700 on the Hang Seng Index.

Riot Games, the creator of League of Legends, is one of Tencent’s largest holdings. League of Legends is the most famous personal computer (PC) game in the world, according to PCGamer.

It also has holdings in Bluehole, which publishes Fortnite’s battle royale rival PUBG, as well as Activision Blizzard, Ubisoft, and several other gaming studios. Last quarter, online games accounted for more than a third of company revenue.

Tencent, the Chinese tech behemoth, continues to grow in revenue. The Internet giant announced a revenue increase of 13% over the Q3 in 2020, reaching over 142 billion yuan in the Q3 of 2021.

Total revenues for the Shenzhen-based corporation increased 13.5% year-on-year to 142.37 billion yuan ($22.27 billion) in the July-September quarter.

The operator of the WeChat super-app increased its net income by 3% to 39.51 billion yuan, slightly ahead of expectations.

2) Buy Shares of Leading Competitor Electronic Arts (EA: NASDAQ)

Electronic Arts (EA: NASDAQ) is one of the most well-known video game businesses in the world.

NFL (National Football League), Star Wars,  Need for Speed, FIFA (World Cup Soccer),  The Sims, Apex Legends, Medal of Honor, UFC, and NHL (National Hockey League) are among Electronic Arts’ most popular games.

On February 2, 2022, Electronic Arts released its official Q3 2022 earnings figures on its investor relations website. In terms of net bookings, underlying profitability, and cash creation, the Q3 was the most successful in the company’s history.

Furthermore, the business announced that it has a record number of active account users playing EA games across its entire ecosystem, with a total of 540 million accounts.

Electronic Arts only managed to raise roughly $2.577 billion for the quarter, compared to an expected value of USD 2.68 billion. As a result, EA stated in its guidance that its anticipated net bookings prediction for the fiscal year 2022 will be $7.525 billion, down from $7.625 billion disclosed in its Q2 2022 financial results.

Despite this, several metric estimates are higher than expected. Electronic Arts are forecasting a net income of roughly $694 million for the fiscal year (up from $583 million in Q2 2022) and diluted earnings-per-share (EPS) of around $2.43 per share (up from $2.03).

3) Buy Activision Blizzard, Inc. (ATVI: NASDAQ)

World of Warcraft, Call of Duty, Candy Crush, and Overwatch,  are all part of Activision Blizzard (ATVI: NASDAQ), which is a publicly-traded firm.

One of the most well-known and criticized huge multiplayer online games is World of Warcraft (MMOGs). In 2021, however, World of WarCraft only had 4.74 million subscribers.

Candy Crush is one of the most popular mobile games in the world, with 273 million monthly active users as of March 7, 2020, according to Video Games Stats. According to The Wrap, the Call of Duty MMOG has over 110 million monthly participants in November 2020.

Activision Blizzard’s net revenues for the year ending December 31, 2021, were $8.80 billion, up from $8.09 billion in 2020. Net revenues from digital channels were $7.66 billion according to GAAP. The GAAP operating margin was 37%. In GAAP terms, earnings per diluted share were $3.44, up from $2.82 in 2020. Activision Blizzard’s non-GAAP operating margin was 44 percent, with earnings per diluted share of $4.08, up from $3.21 in 2020.

Activision Blizzard generated $2.41 billion in operating cash flow in the fiscal year 2021, compared to $2.25 billion in the fiscal year 2020. Operating cash flow for the period was $661 million, compared to $1.14 billion in the Q4 of 2020.

Activision Blizzard’s net bookings for the year ended December 31, 2021, were $8.35 billion, compared to $8.42 billion in 2020. In-game net bookings came in at $5.10 billion, up from $4.85 billion in 2020.

Disclosure: The author is not a licensed or registered investment adviser or broker/dealer. They are not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.

Tim Thomas has no positions in the stocks, ETFs, mutual funds, forex, cryptocurrencies, or commodities mentioned.

This post was produced and syndicated by Tim Thomas / Timothy Thomas Limited.

Disclaimer: In order to make Wealthtender free for our readers, we earn money from advertisers including financial professionals and firms that pay to be featured on our platform. This creates a natural conflict of interest when we favor promotion of our clients over other professionals and firms not featured on Wealthtender. Learn how we operate with integrity to earn your trust.

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