Why won’t they learn? Who shorts gaming companies besides boomers and hedgies?
I’m going to try and keep this short since I could talk about the reasons for hours, but I lack the attention span.
Now I know this stock has been heavily beaten during covid, it has been heavily shorted (41.92% of float according to Yahoo Finance). Anything over 20% is considered high. Also, suffering from the supply chain issue, and the chip shortage, which are all temporary issues, that’s why I think this is a value play.
Long story short, I believe based on the recent price movement before and after earnings, and the already high short interest, the price is as low as it can get and its a good time to start a position.
Even with all the issues, they still grew net earnings for Q3 2021 (391.1M) compared to Q3 2019 (284.4M), it dipped AND “Net revenue for the nine months ended September 30, 2021, was $1.393 billion, an increase of 21.6% year over year”. If you read the latest earnings report, management isn’t worried, and even under the current challenges they are still producing results.
I love this quote: “Based on outside data, we believe that we gained market share in most categories in Q3. Since the start of 2021, we’ve maintained an astounding pace of innovation launching 113 new products, including the addition of several entirely new product lines, which we believe has greatly expanded our total addressable market opportunity.” new products include webcams and gaming monitors, “which we believe has greatly expanded our total addressable market opportunity”. Since these products just came out I don’t think its priced in as of yet.
The play for me is to buy shares. The average trading volume on Yahoo Finance is: 1.56 million. Which makes it easy for shorts to pin the stock price down. BUT luckily for us, it means the stock is cheap and any significant uptick in volume will shoot the stock up potentially causing a squeeze, I just don’t know when, thats why I’ll just buy and hold shares. If you time calls correctly I think this would be a multi-bagger. I might buy some calls later on.
Last thing that I see mentioned and needs to be addressed is the Eagletree shares. I don’t see this as a big issue. They been selling at the $35 mark which means even Eagletree, who bought in at $6.50, thinks its currently undervalued. Worst case scenario, it’s still a 35% upside, way more with calls. I’ll probably trim my position or buy some puts and see what happens.
TLDR: damn i tried to keep it short, left out the basic fundamental stuff, I have already seen posted
– Already heavily shorted 42%, and price is now cheap
– Gaming industry and demand will only continue to grow
– Supply chain issues, chip shortage are temporary, have been a known issue for a while now and already priced in
– This is a company that is actively trying to expand their product line and increase their total addressable market cap, are confident their products will lead to more growth
Unless you see gaming going away in the future, I think Corsair is a good value play at this price.
Position: 1000 shares @ $25.80, just buy and hold baby. Calls if your feeling spicy
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.