Global investments in content creation, distribution strategies, and technological advancements focused on enhancing accessibility and viewer engagement are driving the entertainment market’s growth.

Therefore, investors could consider looking into entertainment stocks Gravity Co., Ltd. (GRVY), Playtika Holding Corp. (PLTK), and DoubleDown Interactive Co., Ltd. (DDI), which are hidden gems for 2025.

Social media has transformed the entertainment industry, prompting traditional players to adopt electronic platforms and allocate more of their advertising budgets to this space. Digital technologies and platforms have greatly enhanced the sector by streamlining content creation, distribution, and consumption, driving significant market growth.

Additionally, the digital entertainment industry has revolutionized the concept of media and entertainment over the past decades, thanks to technologies and gadgets like computers, laptops, smartphones, tablets, and others. The global online entertainment market is projected to grow at a CAGR of 12.8% by 2034. 

Considering these conducive trends, let’s examine the Entertainment – Toys & Video Games stocks in detail, starting with the third one:

Stock #3: Gravity Co., Ltd. (GRVY)

Headquartered in Seoul, South Korea, GRVY develops and publishes online and mobile games in South Korea, Taiwan, Thailand, and the United States. The company provides massive multiplayer online role-playing games, including Ragnarok Online, Dragonica, Ragnarok Online II, and Ragnarok Prequel II.

GRVY’s trailing-12-month P/E of 6.90x is 64.6% lower than the industry average of 19.47%. Its trailing-12-month EV/Sales of 0.11x is 94.2% lower than the industry average of 1.97.

During the third quarter that ended September 30, 2023, GRVY’s total net revenue increased 72.1% year-over-year to $130.69 million. Its gross profit grew 37% from the prior year’s quarter to $43.26 million.

In addition, the company’s profit for the year grew 80.1% year-over-year to $21.50 million, and its earnings per share came in at $3.09, an increase of 80.2% from the previous year’s period.

Shares of GRVY have gained 4.5% over the past three months to close the last trading session at $61.58.

GRVY’s POWR Ratings reflect its outlook. GRVY also has an A grade for Value. It is ranked #7 out of 19 stocks in the A-rated Entertainment – Toys & Video Games industry. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.   

To see additional POWR Ratings for Growth, Momentum, Stability, Quality, and Sentiment, click here.

Stock #2: Playtika Holding Corp. (PLTK)

PLTK develops mobile games in the United States, Europe, the Middle East, Africa, Asia Pacific, and internationally. The company owns a portfolio of casual and social casino-themed games.

In terms of forward non-GAAP EV/Sales, PLTK is trading at 7.78x, which is 42.5% lower than the industry average of 13.53x. Also, its forward EV/EBITDA multiple of 5.01x is 37.3% lower than the industry average of 7.99.

In the third quarter that ended on September 30, 2024, PLTK’s revenues were reported at $620.80 million. Its operating income increased 8.3% year-over-year to $97.50 million. The company’s net income and net income per share grew 3.7% and 10% year-over-year to $39.30 million and $0.11.

Analysts expect PLTK’s revenue for the fiscal first quarter (ending March 2025) to increase marginally year-over-year to $652.68 million. Its EPS is expected to grow 22.4% year-over-year and $0.17 for the same period.

The stock plunged by 1% over the past nine months to close the last trading session at $6.89.

PLTK’s POWR Ratings reflect robust prospects. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. PLTK has an A grade for Value and a B for Quality and Stability. It is ranked #2 in the same industry. 

Beyond what is stated above, we’ve also rated PLTK for Sentiment, Growth, and Momentum. Get all PLTK ratings here.

Stock #1: DoubleDown Interactive Co., Ltd. (DDI)

DDI engages in the development and publishing of casual games and mobile applications in South Korea. It publishes digital gaming content on mobile and web platforms. 

In terms of trailing-12-month EV/Sales, DDI is trading at 0.52x, which is 74.3% lower than the industry average of 2.01x. Also, its trailing-12-months EV/EBITDA multiple of 1.27 is 84.2% lower than the industry average of 7.99.

For the third quarter ended September 30, 2024, DDI’s revenue increased 5.5% year-over-year to $83 million. Its adjusted EBITDA came in at $36.10 million. The company’s net income was reported at $25.14 million and $10.11.

Over the past year, DDI’s stock has gained 31.8% to close the last trading session at $10.23.

DDI’s POWR Ratings reflect its bright outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

DDI has an A grade for Value and Quality and a B in Growth and Sentiment. It is ranked first in the same industry.

For additional DDI’s Stability and Momentum, click here.  

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PLTK shares were trading at $7.00 per share on Friday afternoon, up $0.11 (+1.60%). Year-to-date, PLTK has gained 0.86%, versus a 1.08% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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