“I’m not saying they’re done going down at this point — I definitely think they have more downside — but at some point they’ll be cheap enough to be worth buying. It’s just that we aren’t there yet,” he said.
Video game companies saw their stocks skyrocket during the height of the Covid pandemic, as consumers hunkered down and turned to at-home entertainment. That changed when the economy reopened, leading to a boom in outdoor activities.
“In other words, life is too short to stay at home playing video games, or at least that’s how many consumers seem to feel at the moment,” Cramer said.
He added that the companies are also weighed down by the dependence on revenue streams from digital advertising, which has seen a downturn as the Federal Reserve raised interest rates to slow down the economy.
Nevertheless, the headwinds facing the video game industry will likely abate, though it’s unclear when, Cramer said.
“While the video game industry came out of 2022 looking like one of the biggest losers … I think it could just turn out to be a temporary problem, not a permanent one. Too soon to start bottom fishing here, but eventually, there will be a bottom,” he said.