How to Invest in Mobile Apps

- February 15th, 2021

Mobile apps represent a wealth of opportunity for investors with an interest in technology stocks.

The ubiquity of mobile devices and their prominence in everyday life has led to the development of mobile apps for everything from gaming and dating to banking and stock trading.

Mobile apps began rising to prominence in 2007 with the launch of iPhone, which heralded a new era in connectivity brought about by revolutionary touch technology. The diversity of today’s offerings makes investing in mobile apps an appealing prospect.

With nearly 3 million apps in Google’s (NASDAQ:GOOGL) Google Play Store, and nearly 2 million apps available in Apple’s (NASDAQ:APPL) App Store, there is no shortage of app choices for mobile devices.

According to data from Statista, there are 3.8 billion smartphone users and 1.14 million tablet users in the world. What’s more, Buildfire states that the average American engages with their phone every 12 minutes, with 88 percent of that time spent on mobile apps.

Here the Investing News Network provides insight on investing in mobile apps and tapping into the profit potential in this sector of the tech market.

How to invest in mobile apps: The most popular mobile apps

How can investors successfully leverage the exponential growth in mobile web apps? Looking at the top-downloaded and the top-grossing apps gives an indication of what consumers value in an app.

Information from Statista shows that gaming apps account for roughly 22 percent of app downloads in the App Store, followed by business apps at slightly over 10 percent and education apps at 8.6 percent. Gaming is also the most-downloaded app category for the Google Play Store, clocking in at about 13.5 percent; it’s followed by education at nearly 9.5 percent and business at nearly 7 percent.

In terms of revenue, the top-grossing apps in the App Store as of September 2020 were dating app Tinder (US$33.86 million) and gaming apps Monster Strike (US$28.92 million) and King of Glory (US$25.68 million). Another Statista report shows that the top-grossing Android apps worldwide at that time were the gaming apps Lineage M (US$113.89 million), Coin Master (US$70.95 million) and Pokémon Go (US$46.53 million). Grand View Research reports that the primary propellers behind mobile gaming revenue growth are advertisement, game purchases and in-app purchases.

While gaming apps clearly dominate the mobile app industry, fintech apps are gaining market share too. According to research from App Annie, outside of China, finance apps experienced a growth rate of 45 percent year-over-year in 2020 — perhaps to be expected given the surge in new retail investors.

Unsurprisingly, with the COVID-19 pandemic reshaping business and social life, apps such as Zoom, Google Meet, Facebook and Instagram have also witnessed increases in monthly users. Ericsson, a leading provider of information and communication technology to service providers, has said that social media apps are set to grow at a compound annual growth rate of 24 percent between 2018 and 2024, accounting for 8 percent of total mobile traffic.

Overall, App Annie’s research shows that consumers are spending more and more time using mobile apps on smart devices, and this trend is multi-generational. In the US, time on apps in 2020 was up year-over-year for Gen Z (16 percent), Millennials (18 percent) and Gen X/Baby Boomers (30 percent).

The apps Gen Z prefers are Snapchat, Twitch, TikTok, Roblox and Spotify. Millennials are most drawn to Discord, LinkedIn, PayPal, Pandora Music and Amazon Music. For Gen X/Baby Boomers, the top apps are Ring, Nextdoor, the Weather Channel, Kindle and ColorNote Notepad Notes.

How to invest in mobile apps: Where to start

The statistics above clearly show consumer enthusiasm for mobile apps across all age segments. But there’s another demographic with a growing interest in this tech sector: investors.

According to Gadgets 360, investment in mobile technology companies more than doubled between 2016 and 2020 compared to the previous five years. In 2020 in particular, investment in mobile tech companies rose 27 percent year-over-year to US$73 billion.

With this expansive growth in the market, investors are blessed with a wide variety of mobile app stocks to choose from, especially in gaming, social media and fintech.

Outside of Apple, Microsoft (NASDAQ:MSFT) and Google, other top stocks for mobile gaming include Tencent Holdings (OTC Pink:TCEHY), Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA), Take-Two Interactive (NASDAQ:TTWO) and Zynga (NASDAQ:ZNGA).

In terms of social media apps, Facebook (NASDAQ:FB), Zoom (NASDAQ:ZM), Amazon’s (NASDAQ:AMZN) Twitch, Snapchat (NYSE:SNAP) and NetEase (NASDAQ:NTES) offer investors a way into the market.

A few fintech stocks worth investor attention include PayPal (NASDAQ:PYPL), Square (NYSE:SQ) and Affirm Holdings (NASDAQ:AFRM).

Andrew Chanin, CEO of PureFunds, has suggested that investors diversify. “By diversifying your exposure to multiple app companies, you may be able to reduce individual company risk,” he said.

With that in mind, exchange-traded funds (ETFs) are always a good option for investors who don’t want to go all in on a single company. Mobile app ETFs for investor consideration include:

  • Wedbush ETFMG Video Game Tech ETF (ARCA:GAMR)
  • ETFMG Mobile Payments ETF (ARCA:IPAY)

Overall internet-based ETFs that can provide exposure to the mobile web include:

  • First Trust Dow Jones Internet Index Fund (ARCA:FDN)
  • KraneShares CSI China Internet ETF (ARCA:KWEB)
  • PowerShares NASDAQ Internet Portfolio ETF (NASDAQ:PNQI)
  • Emerging Markets Internet & eCommerce ETF (ARCA:EMQQ)

This is an updated version of an article first published by the Investing News Network in 2015. 

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article

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