by SanoKei
Lets take a look at Corsair Gaming. Lets first take a look at the bearish case and then the bullish case. I will discuss Corsair more after.
Bearish case:
-Significant insider selling. Institutional ownership has decreased steadily. On 1/29 it was 17.7% today 2/19 it is 15%[1]
-Short volume (higher is better) has decreased from 31% on 2/03 to 25% today 2/19[2] (Meaning the number of shares available to short is only around 1 million shares)
-Analysts predict a Q1 2021 EPS ratio of $0.27 down from Q4 2020 of $0.53[3]
-Corsair has a high price to book ratio versus the overall tech sector. Corsair’s 8.14 (as of eod 2/19) v. The tech sector’s 4.07[9][8]
-Corsair has a high total debt to equity ratio versus the overall tech sector. Corsair’s 0.73 v. The tech sector’s 0.04[10][11]
-Cost of revenue increased from 872,887 to 1,236,938 (TTM) between 2019 to 2020[13]
-Corsair Gaming’s lock-up period expires on Monday, March 22nd which will drop the stock an average of 1% – 3%[15]
Bullish case:
-Corsair has diversied into the streaming market, they own Elgato and have bought impulse[4]
-Corsair has a low price to earnings ratio versus the overall tech sector. Corsair’s 27.77 v. The tech sector’s 45.49 [7][8]
-Corsairs debt to equity ratio has decreased from 2.051 in July 2020 to 0.735 in Feburary 2021[10]
-The interest coverage of Corsair is 3.00[12]
-Total revenue increased from 1,097,174 to 1,702,367 (TTM) between 2019 to 2020[13]
-The site “simply wallstreet” predicts a fair value of Corsair gaming at $65.00[14]
(Not directly bullish) -The gaming market and streaming market are up from 2020. [5][6]
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Corsair has bad fundementals, however I believe this move into streaming is a good one. Targetting people who want to become streamers and selling corsair products is a great way to increase profits within the companies attmosphere. Corsair’s CEO expressed interest in streaming boot camps and training. If heading into this direction, Corsair can eat up Chinese market share when looking to create stablized boot camps to create streamers. If Corsair does go in this direction they can create a new revenue source by contracting the streamers they trained, taking a percentage of their profits and advertising Corsair products to the audience.
I see a lot of people compare Corsair to Logitech $LOGI which is fair until you realize that Corsair is more than just a gaming accessories company. They create computers and buy software related to streaming. Logitech is a company that makes products for gamers and trational companies and consumers while Corsair focuses on gamers and now streamers. This difference seems small until you realize that Corsair doesn’t have a real direct competitor.
The blue ocean strategy approach Corsair has taken to be able to cement themselves into the gaming community will pay off 10 fold in the future. I believe that Corsair will be synonyms with gaming and gaming culture making it worth more because of the brand rather than the fundemental book value.
I believe that paying anywhere $38.50 – $42.60 per share is a good investment for short-term investors. As a long-term investor buying in at any price will pay off in 5 to 10 years.
Corsair Gaming has a lot to offer and I am excited to see where it goes in the future.
Sources:
[4] finance.yahoo.com/news/great-content-design-corsair-acquires-140000904.html
[5] financesonline.com/number-of-gamers-worldwide/
[6] twitchtracker.com/statistics
[7] www.nasdaq.com/market-activity/stocks/crsr/price-earnings-peg-ratios
[8] csimarket.com/Industry/Industry_Valuation.php?s=1000
[9] ycharts.com/companies/CRSR/price_to_book_value
[10] ycharts.com/companies/CRSR/debt_equity_ratio
[11] csimarket.com/Industry/industry_Financial_Strength_Ratios.php?s=1000
[12] www.finscreener.org/title/key-ratio-history?kpidcp=58766&kpi=5&idcp=58766#:~:text=(CRSR)%20is%203.00,-The%20interest%20coverage&text=It%20measures%20the%20margin%20of,debt%20during%20a%20given%20period%20is%203.00,-The%20interest%20coverage&text=It%20measures%20the%20margin%20of,debt%20during%20a%20given%20period)
[13] finance.yahoo.com/quote/CRSR/financials?p=CRSR
[14] simplywall.st/stocks/us/tech/nasdaq-crsr/corsair-gaming
[15] www.marketbeat.com/stocks/NASDAQ/CRSR/
Disclosure: I own 56 shares @ $38.70 I am not a financial advisor. Please buy and sell securities at your own risk and own discretion.
edit:Typo; changed PE to EPS “-Analysts predict a Q1 2021 PE ratio of $0.27 down from Q4 2020 of $0.53[3]”
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.