If you’re thinking about investing in video game stocks, you’re certainly at an advantage.
You’ve got extra cash or some extra assets at hand, which you want to multiply without putting in much effort. You want to get into the lane where people are multiplying their money smartly.
Isn’t that the case? Highly likely.
And you’ve settled for stocks as a means of investment, which is a smart move.
But another detail that we must not overlook is the fact that you’ve chosen to invest in video game stocks.
Is it out of interest? Or do you see potential in the industry?
We don’t know how clear you are about your moves right now and so here’s a quick guide to help you get it all sorted, planned, and in place. By the time you’re done reading this post, you will have clarity about your choice and detailed insight about three common mistakes to avoid. So, let’s get to it!
Video Game Stocks: Here’s Some Clarity
Video game stocks are highly recommendable for video game enthusiasts. If you have no idea about video games and are only allured by the profits offered by this industry, we recommend you to step back.
That’s because evaluating a video game company and its future isn’t easy. This evaluation demands experience and expertise. You can only do that if you’re passionate enough.
Video game stocks are also a good choice for anyone who can be patient with the results and handle quick, significant gains now and then.
Another concern that you ought to address before finalizing things: are you looking forward to investing in a publicly-traded video game company or a privately held company? Ideally, you should go for a publicly-traded company, and here’s why.
With that said, here are a few essential investment terms that you must know:
- Stock: It refers to a certificate that indicates your ownership share in a company.
- Share: It is interchangeably used with stock as it means the same. But it’s specific to a company.
- Market Capitalisation: The total current value of a company with all of its shares combined.
- IPO: IPO stands for Initial Public Offering. It refers to the first time a company offers its share in the stock exchange, such as the Epic Games IPO. Remember, IPO lets you buy shares directly from the company instead of a shareholder.
- Liquidity: It refers to how easily a share can be sold off.
You can discover more here. But if you find yourself not-so-sure about the terms, get into deeper detail! Misunderstandings and lack of information are the leading causes of mistakes.
3 Mistakes to Avoid When Investing in Video Game Stocks
Okay, so you are investing in video game stocks. That’s good.
Now, here are three mistakes that you must avoid:
#1. Investing in the Idea Only
Most people who invest in video game companies are driven by passion. So, if you are one of them, know that you’ve got to request your passion to take the backseat. And that’s because there’s no room for blind deals and blunders when it comes to stock investments. If you invest only out of passion, you may end up losing all your assets.
In case you don’t see what do we mean by passion here, then visualize this:
You come across a company that makes an enhanced version of the game you’re most skilled at or the game you love. You decide to invest in this game without a second thought because you’re emotionally and passionately tied to it.
But the company didn’t have any success. And all your faith and trust (in the game you love) goes down the drain.
Do you see what we mean?
Instead, if an idea appeals to you, do your research. Check out the team behind the idea, assess their capabilities, drive, and work experience. Assess the company’s experience in the industry and success rate. Their previous performance will help you determine whether they have a potential for sales or not.
#2. Not Keeping Up with the Trends
Most people think a lot before investing in a certain company. They do their share of research work and still end up with the loss of assets.
Well, that’s because they fail to keep up with trends. If you invested in a video game company because it was trending back in that time frame, you made a good decision. But with the passage of time, as the trend changes and the performance of this company reduces, it’s not a wise decision to continue this journey further. It’s outdated and may not be able to regain the popularity that it once did unless it’s coming up with an upgraded version.
Similarly, when you’re investing in a video game idea/team when it’s only in its developmental stage, assess industry growth, and determine whether their idea will still be valid and worthy by the time they launch. Know that the video game industry is fast-paced, and it is absolutely important for you to consider this factor.
#3. Thinking it’s Just Your Luck
Perhaps, the most common mistake that most people make when investing in any kind of stock is to assume that the profit/loss is all about their luck.
Well, with stocks, that’s never the case!
Base your decisions on facts and figures. Study the annual performance reports of the company you’re investing in and determine the trend of their growth and success. You may have a business analyst help you out with this. Never base your decisions based on assumptions, especially in video game stocks where everything is so predictable and measurable.
Stocks are indeed risky. And video game stocks are riskier. But if you don’t take the leap of faith right now, you might regret it later. So, take the risk. Do not hesitate with that. But do it wisely!