Industry Updates

VanEck video gaming ETF jumps on GameStop surge

ESPO has risen 8.3% since Monday

Lauren Gibbons

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VanEck’s video gaming and esports ETF has spiked since the shares of video game retailer GameStop soared following a social media post by retail investor “Roaring Kitty”, who became synonymous with the 2021 meme stock craze.

The X account – inactive since June 2021 – posted the same image GameStop shared on its own social media account in February, sparking retail investors to pour into the stock and pushing shares to peaks of 119% on Monday.

The $523.5m VanEck Video Gaming and eSports UCITS ETF’s (ESPO) shares lifted 8.3% since May 13, after GameStop’s shares surged 74% following the post from day trader Keith Gill on X.

ESPO has a 2.2% weighting to GameStop.

Conversely, ESPO’s smaller rival, the $4.9m Global X Video Games & Esports UCITS ETF (HERU), does not have any exposure to the video game retailer, with shares remaining stable.

Despite HERU having a much broader index of 40-50 constituents versus ESPO’s 25, Global X’s ETF has no exposure to the video game retailer.

To qualify for the index HERU tracks, companies must derive 50% of their revenues from video games and esports related business.

This includes businesses involved in game development or publishing, streaming or distributing gaming content, managing esports leagues or teams and manufacturing gaming or esports hardware.

GameStop's exclusion from the index rests on its revenues not aligning with Solactive's – the index provider – definitions for video game and esports-related earnings.

A spokesperson from Solactive said: "GameStop distributes video games but so does Walmart. Retailers are not really a good reflection of the video games and esports landscape."

Global X declined to comment.

The FinEx Video Gaming and eSports UCITS ETF (FXES) has a 6.29% weighting to GameStop, the highest of any UCITS ETF.

Commenting on the rally, Myron Jobson, senior personal finance analyst at Interactive Investor, said the surge was more tied to “FOMO investor sentiment”, rather than the company’s fundamentals, which Jobson said instead painted a “bleak picture”.

GameStop has not been short of headline worthy moments, with retail investors flocking to buy the stock in 2021 after initiating a deliberate short squeeze designed to harm the returns of hedge funds.

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