It’s Not Game Over for E-Sports Stocks. This Chart Shows Why.

It’s Not Game Over for E-Sports Stocks. This Chart Shows Why.

Rob Isbitts

Wed, August 12, 2026 at 11:45 PM GMT+3 3 min read

I played the very first Madden Football video game, but I'll admit I never thought that e-sports would be "a thing," complete with prize money, TV contracts, and all. But that just goes to show what I don't know — and how old I am.

But investing in e-sports? That is very much in this trader's wheelhouse. That brings me back to the VanEck Video Gaming and Esports ETF (ESPO), the primary exchange-traded fund (ETF) I've used to participate in that space. Especially when the daily chart presents as nicely as this one does.

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A Closer Look at ESPO

What do I see here? First, the chart indicates that a key resistance level at around $97 a share was just taken out. The 20-day moving average is positive, and the 50-day is too.

As a nice kicker to the technical story for ESPO, its PPO indicator, shown at the bottom of the chart, is now back in positive territory. It has spent nearly all of the past 12 months below the critical zero line. So this sure smells like a positive momentum shift.

How did we get here, with ESPO as an 18-month nothing burger? As you can see, its recent rally brought it back to where it was trading in February of last year.

The video game and digital entertainment sector suffered a multi-year post-pandemic hangover characterized by game delays, over-hiring, and corporate restructuring. Recent price action in ESPO indicates that the sector has completed its valuation reset.

Driven by record-setting blockbuster launches, mobile ad-tech monetization, and aggressive cost rationalization, ESPO's chart reflects a fundamental rethink by investors when it comes to global gaming publishers.

Unlike broad media funds, ESPO maintains a concentrated, rules-based basket of companies generating significant revenue from video games, hardware, and e-sports. Key drivers behind the current move include:

• Operational efficiency: Major game studios completed major headcount reductions and project cancellations, leading to expanding operating margins on new releases.

• Next-generation hardware cycles: Anticipation and launch cycles for new gaming consoles and handheld devices drive high-margin software sales.

• Mobile ad-tech monetization: Gaming platforms are utilizing programmatic advertising software, such as AppLovin (APP), to increase average revenue per user across mobile gaming networks.

The Risks of Investing in E-Sports

ESPO is not without risks, of course. Video game publishers rely heavily on a small number of franchise launches. A major game delay or poor reception can impact quarterly earnings. And potential changes to app store commission structures or user privacy rules can impact mobile ad targeting and developer profit margins.

This is a highly focused ETF, in large part because the industry itself does not contain hundreds of companies. That said, there's concentration at the top within ESPO, with 10 stocks making up more than 60% of assets, and the top six positions each occupying at least 6% of the ETF's total basket.

As we see above, this is not a very large ETF. At under $300 million in assets, ESPO is not the first thing even ETF wonks like me think of. But every so often, it hits my radar. It has now, due to the chart picture.

And it doesn't hurt that this stock group is selling for just 19x earnings and has been in the red, price-wise, for the past 12 months. It all sets up for a potential comeback.

Rob Isbitts is a semi-retired CIO, former fiduciary investment advisor, and Barchart columnist. Check out his other work at ETFYourself.com (featuring the Fresh Charts weekly trading post), and ROAR.PiTrade.com, helping investors to better-manage their own portfolios.

On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com