GameStop Doesn’t Make the Cut in NERD ETF’s Big 2025 Run - Roundhill Video Games ETF (NASDAQ:NERD)

The Roundhill Video Games ETF NERD launched in 2019 and is having a great year in 2025 thanks to the launch of the Switch 2 console from Nintendo Co NTDOY.

Roundhill Investments CEO Dave Mazza shares thoughts on the Switch 2 launch, what sports games mean to Electronic Arts EA and why GameStop Corporation GME doesn't make the cut for inclusion in the ETF.

Switch 2 Success: The Nintendo Switch 2 launched with a price of $449, $150 above the cost of the original 2017 model. Despite the higher price, the console saw strong initial sales and continues to sell-out.

"All early datapoints say ‘blockbuster.' Nintendo sold 3.5 million Switch 2 units in the first four days, the fastest start for any console in the firm's history," Mazza told Benzinga.

Mazza said the strong early sales have Nintendo management guiding to ship 15 million consoles in the current fiscal year, which will lift revenue by more than 60% and operating profit by around 13%.

The Roundhill CEO said the consensus is that Nintendo could return to record earnings if the strong unit sales and strong software sales happen as quickly as the original Switch.

But it's not just the Switch 2 that makes a Nintendo investment exciting, Mazza told Benzinga. Nintendo is currently the largest holding at 12.1% of assets in the Roundhill Video Games ETF.

"The investment story increasingly pivots on monetizing intellectual property beyond plastic cartridges."

Mazza said this includes first-party software like the "Donkey Kong Bananza" game, mobile apps, royalties from movies and the company's theme-park footprint.

"Each new entertainment vertical widens reach, supports evergreen game sales and extends the duration of cash flows, which is an IP flywheel few peers can replicate."

Microsoft Vs. Nintendo?: A potential competitor to the Switch 2 could be coming with Microsoft Corp. MSFT announcing the ROG Xbox Ally and Ally 2. Mazza said these are more "portable Windows gaming PCs" than video game consoles.

"They aim at the enthusiast Steam-Deck tier rather than the family-friendly Switch demographic."

Mazza said success for the Microsoft handheld will come based on access to the full Xbox Game Pass library on day one, strong battery life and specs to run AAA titles and a price point of under $799.

"If Microsoft nails those three, the device can thrive alongside and not directly against Switch 2."

Mazza said Nintendo having NVIDIA Corp NVDA chips and Microsoft having Advanced Micro Devices Inc AMD chips won't be a major selling point for gamers, but maybe to investors.

"The logo matter more to investors with Nvidia's presence signaling another growth beachhead, whereas gamers judge on real-world performance and ecosystem fit."

EA Sports: Electronic Arts releases sports titles annually and is growing its library thanks to the expansion in college sports.

"Sports titles are EA's cash cow as Madden and College Football together drove an upside revision to FY-25 bookings," Mazza told Benzinga.

Mazza said the report that a college basketball franchise could be returning to EA would mean another annualized franchise with "highly monetizable Ultimate-Team-style modes."

The Roundhill CEO estimates that a college basketball video game could sell four million titles conservatively and could mean $300 million in bookings for EA. The game could also increase engagement between gamers and EA in between football seasons.

GameStop Not In ETF: Investors might think that it makes sense to put video game retailer GameStop into the video game ETF, but that's not the case.

Mazza said there are several reasons GameStop doesn't make the ETF cut. The most important one is the ETF seeking to track the Nasdaq CTA Global Video Games Software Index, which GameStop isn't included.

The index includes publishers and developers of games and digital content creators, but doesn't include physical retailers.

Mazza also said GameStop's current financials would likely keep the stock out of the ETF.

"GameStop also fails the growth-quality screen: revenue is shrinking double-digits as sales migrate online, and recent meme-driven volatility has been disconnected from fundamentals."

NERD Price Action: The Roundhill Video Games ETF ended trading at $25.94 on Thursday versus a 52-week trading range of $14.50 to $26.75. The ETF is up 31.3% year-to-date in 2025 and up 57.7% over the last year. Nintendo, the largest holding in the ETF, is up 50.4% year-to-date in 2025.

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