This post is part of a series on popular but unlisted companies. In the series, I’ve covered Hulu, SpaceX, Instagram, Subway, 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, this makes it an interesting investment.
This is What You Need to Know About Epic Games Stock
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 an $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 2022.
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 – the world’s largest video game corporation, 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?
Unfortunately for investors, it’s not possible to buy Epic Games stock since it is a privately held company; As a retail investor, you will be unable to purchase Epic Games stock through a stock exchange or brokerage account. Instead, investors can consider some of Epic Games competitors or Tencent Holdings.
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.
Epic Games IPO
You’re probably wondering if there’s going to be a public-offering of the stock meaning will Epic Games ever become a public-company and offer an Intial Public Offering (IPO).
Well, for a private-company to think about going public on the NYSE, like all public companies, there will be a need for reporting and providing financial statements and transparency, as well as a potential valuation.
However, so far there’s been no announcement from Sweeney or Tencent Holdings about offering stock to shareholders.
That said, if the company needed to raise capital at some point in the future, a IPO might be something that’s considered but there’s been no news on this.
Fortnite is a free-to-play video game set in a zombie-infested post-apocalyptic world. Tim Sweeney created the game and Epic Games launched it in July 2017.
Although the game’s model is not wholly unique, there is a high number of shooter-type games on the market, and Fortnite stands out. Its free-to-play business model has a few variants, but anyone can play a fully functional game for no charge.
If you were interested in buying Fortnite stock, you would actually need to look at the company behind the game, Epic Games but since the company is privately held and with no sign of an IPO, investors’ best option is to look at Tencent Holdings (covered below).
What the Ways to Make Money With Fortnite?
Betting On Fortnite
If you enjoy watching Fortnite streams or playing the game, there are a number of esports betting sites where you can place bets on many of the biggest Fortnite tournaments and competitions now taking place around the world.
Betting on your favorite Fortnite stars while watching the action develop on a live stream is one of the more entertaining methods to make some money while watching your favorite stream.
Create a Fortnite Streaming Channel of Your Own
There’s no denying that live streaming has grown into a massive industry, with some of the biggest and finest live broadcasters earning six, seven, or even eight figures from their channels alone.
Because Fortnite is such a popular game among players and watchers, creating a popular live stream is another possibility.
However, to stand out among the millions of Fortnite streams, you’ll need to come up with something unique, different, and eye-catching.
If you succeed in doing so and your stream begins to gain traction, the value of your stream and your potential revenues will increase as the number of watchers and subscribers grows.
Invest in Equities That are Related to Fortnite
Although Epic Games is a privately held corporation, China’s Tencent Holdings owns a 40% stake in the company, and you can invest in it through stocks and shares.
Funko inc., a well-known Japanese toy firm, is another choice for people interested in the stock market. The firm, which sells a variety of collectibles, agreed to develop a number of Fortnite-themed toys and collectibles.
Although Epic Games does not have shares, some of the items you’ll need to play their most well-known game are made by publicly traded companies. Turtle Beat Corp. makes high-quality headsets that are frequently utilized by top Fortnite players to obtain insight into the positions of other players while playing the game.
3 Ways in 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 IPO; You can buy the shares in Tencent Holdings ADR which trades under the ticker symbol (TCEHY: OTCMKTS).
The stock which went public in 2004, trades in Hong Kong exchange, on the Hang Seng Index in 2004.
The Chinese tech behemoth, announced a revenue increase of 13% over the Q3 in 2020, reaching over 142 billion yuan in the Q3 of 2021. Total revenues 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.
More About Tencent Holdings
Tencent Holdings is a Chinese multinational firm that many consider the world’s largest video gaming company.
The firm was established 1998 with its head office in Shenzhen, China and its subsidiaries market various Internet-related products and services globally, including entertainment, artificial intelligence (AI), and other technology.
Tencent is the world’s largest video game retailer and one of the world’s most financially valuable organizations. It is among the most prominent social media, investment, and venture capital corporations.
Its services include Internet services, multiplayer online games, mobile games, music, social networks, e-commerce, web portals, smartphones, and payment systems.
It operates the instant messengers WeChat, Tencent QQ, and QQ.com. Tencent also owns Tencent Music.
Tencent has a diverse range of interests, though it is perhaps best recognized for its messaging services. WeChat has over a billion users, both within China and across the globe – the Chinese version is known as Weixin.
Although it is often compared to WhatsApp – it is widely used for messaging – the Chinese government has outlawed several US messaging applications and social media sites, so WeChat dominates in China.
WeChat, however, is much more than just a chat app. It’s more analogous to a standalone operating system: it’s used to read news, pay bills, order transportation or meals, and manage small enterprises.
Tencent earns big revenues from its gaming business. Tencent is the world’s largest video game publisher. It holds a stake in Fortnite and PlayerUnknown’s Battlegrounds, two of the most popular Battle Royale games (PubG).
Despite failing to get the game approved for distribution in China, it owns a 40% share in Epic Games’ Fortnite studio and holds the license to PlayerUnknown’s Battlegrounds (PubG). Riot Games, the studio behind League of Legends, is also owned.
Music and Movies
It also invests in music and films from the United States. Tencent closed a deal to obtain a 10% share in Universal Music Group. Prominent musicians such as Lady Gaga, Taylor Swift, Drake, and Kendrick Lamar are signed to the record label.
Furthermore, Tencent has its music subsidiary, Tencent Music Entertainment (TME). In 2017, it took a 7.5% stake in streaming powerhouse Spotify as part of a share swap. Tencent Pictures, the company’s film, and production arm have worked on several Hollywood films.
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.
2) Buy Shares of 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.
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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.
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Tim Thomas holds no positions in the stocks, ETFs, mutual funds, forex, or commodities mentioned.
This post was produced and syndicated by Tim Thomas / Timothy Thomas Limited.
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