With Get Corsair Gaming, Inc. Report (CRSR), this gaming computer hardware company made an announcement of a revenue target of $3.5 billion USD by 2026. So, does this mean Corsair's Stock is still a worthwhile long-term investment opportunity? First off, Corsair Gaming is not a video game manufacturer, nor does it host any online betting or gaming events. It is a company that designs and sells computer hardware and peripherals that are designed with gamers in mind. Instead of games here, think more along the lines of flash drives, keyboards, memory modules, and power supplies. On the Reddit threads, Corsair Gaming has become a hot, trending topic. This is because the stock has generated a lot of short interest, despite having fundamentals that are relatively decent and have a valuation below its peers. CRSR stock lost more than forty percent in 2021 while under attack from short-sellers. However, Corsair's management does expect the company to see a significant amount of long-term growth. When Corsair announced its ambitious financial targets during its 2022 Virtual Investor Day presentation, it brought up the company's revenue will hit $3.5 billion USD within the next five years.
Corsair Current Events
Currently, Corsair is the market leader in gaming components that boasts a solid forty-two percent of the overall market share. This does not include memory. through the Elgato brand, content creation products have become the company's biggest growth driver. It has accounted for one-third of revenue from the company's Gamer and Creator Peripheral division from the previous year. Despite this, the company still has plans to continue expanding into other categories such as pre-built PC gaming monitors, gaming perephrials, and streaming cameras. Corsair has revealed ahead of its quarterly earnings call that it expects to net a 2021 revenue of approximately $1.9 billion USD. This is the higher end of its previous range of $1.8 to $1.9 billion USD. This number indicates Corsair will beat the expectations placed by Wall Street, considering there was the consensus of a $1.88 billion USD revenue for the year. This gives cause to believe the year 2022 will see Corsair net a revenue somewhere between $1.9 billion USD and $2.1 billion USD. Although this may not seem very aggressive, this is still an impressive number.
2021 was a turbulent year and not just for Corsair. The company did lose more than forty percent of its share price in 2021 and it was reported by Yahoo Finance that its shorts account for more than thirty-six percent of its float. What caused this bad performance for Corsair stock stems from the extreme competition that exists in the gaming hardware business. Corsair's focus is mostly on consumer sales while its competitors, like Logitech and Dell, share healthy business to business (B2B) sales. The pricing system that is the core of Corsair's business is based largely on its growth potential. The long-term success formula depends on the development of new products, which have been lagging behind those of its competitors. Furthermore, the supply chain disruptions didn't help Corsair's business at all in 2021 as it did for many other tech stocks.
Long Term Focus
Because Corsair has decent fundamentals in place, it has a strong buy rating from the Wall Street consensus. With the average price target of $34 USD, experts believe this would represent an upside of more than sixty percent by the end of 2022's year. When looking at its valuations, it seems Corsair's stock is undervalued. In February 2021, the CRSR had a price-to-earnings (P/E) ratio of thirty times. As of the timing of this article writing, the P/E ratio now stands at thirteen with the average P/E ratio in the gaming industry at twenty-five. With the global gaming market expecting to reach $257 billion USD by 2025, this puts Corsair into a multiple earnings projection that seems very likely. Thanks to CRSR becoming a short-selling target, investors stand to benefit from a possible short squeeze, as well as the strong business fundamentals that have been laid out by the company. According to The Street, Corsair seems to be a good long-term investment. According to Retirement Investments, the COVID-19 pandemic saw the gaming industry realize substantial growth. Investing in Corsair seems safe enough as a long-term investment as the pandemic has laid out a whole new range of ground rules that not only affect the gaming industry but how people seek any form of entertainment that doesn't require leaving the home.
Winners and Losers
The stock market is a roller coaster ride that sees winners and losers constantly. The smartest choices for investors to make are not always the easiest to make since the New York Stock Exchange can often feel like betting on a racehorse at the tracks. When placing an investment into a stock, sometimes even the best bet can bring forth a shocking disappointment that can be costly. At the same time, what seems like a dark horse becomes the crown prince of Wall Street. Is Corsair that crown prince? At the moment, most Wall Street experts say it is. Corsair is a PC component company that happens to have a niche in the gaming peripheral department. Since PC components and accessories sum up a huge portion of the forever evolving world of technology, Corsair stands to become one of those industry leaders as it further establishes itself.
More About Corsair
Corsair's start began in 1994, in Freemont, California, with four engineers, three of whom are co-founders Don Lieberman, John Beeklye, and Andy Paul. The initial product lineup was computer memory chips. Since then, the company has expanded into the production of various PC components, as well as peripherals, and furniture. The company's primary focus is on the gaming industry, knowing there are recreational and professional gamers who continue to invest time and money into what has become the most popular form of entertainment in the world. Corsair also supports the e-sports community and offers high-end computer accessories and peripherals to accommodate its demanding need. The e-sport community drives larger sales upon each new year, as well as the marketing volume. Andy Paul is the Chief Executive Officer (CEO) of Corsair and one of the co-founders. Before this, he started and presided over Multi-chip Technology. Working alongside him is Michael Potter, who is the Chief Finance Officer (CFO) who has worked in the financial industry for thirty years. Prior to Corsair, he was the CFO for Canadian Solar. There is also Thi La, who has been the president of Corsair since January 2022. She was originally the company's Chief Operations Officer since 2013 and still holds that position today. Prior to Corsair, she served as the Vice President of Global Operations and IT for Opnext, Inc.
Originally as Corsair Microsystems Inc., the start of the company saw it develop level two cache modules, which are otherwise known as cache on a stick (COASt) modules. After Intel incorporated these L2 cache modules in the processor with the release of its Pentium Pro processor family, Corsair altered its focus to dynamic random-access memory (DRAM) modules as a means to cater to the server market. This particular effort was led by Richard Hashim, who was one of the first employees at Corsair. These DRAM modules started to ship in 2002 after Corsair's design appealed to computer enthusiasts, who were using them for overclocking. Since this occasion, Corsair has continued to produce memory modules for PC computers, as well as an additional array of computer components. Corsair expanded its DRAM memory module production into the high-end market for overclocking. This allows for high-powered platforms, as well as the ability to get more performance out of the CUP and RAM. The Corsair Vengeance Pro series and Corsair Dominator Platinum series are specifically built for overclocking applications. Additional expansion efforts carried out by Corsair include an expansion of its product line that now includes many different types of high-end gaming peripherals, high-performance air and water cooling solutions, and other enthusiast-grade components. As of 2009, what is now Corsair Gaming Inc., contacted CoolIT Systems to integrate this liquid cooling technology into Corsair's offerings, which has since resulted in a long-term partnership.
On July 26, 2017, EagleTree Capital had entered into an agreement to acquire a majority stake in Corsair from Fransico Partners and several other minority shareholders in a deal that was valued at $525 million USD. Corsair's Andy Paul retained his equity stake and still remains in the position as the company's CEO. On June 27, 2018, Corsair had announced it acquired Elgato Gaming from the Munich-based company, Elgato. This, however, did not include Elgato's Eve Division, which was spun off as Eve Systems. On July 24, 2019, Corsair Components, Ince. acquired ORIGIN PC Corp, which specializes in customized desktop computers and laptops, especially for the lucrative gaming industry. On December 16th of this same year, Corsair announced its intention to acquire SCUF Gaming. Then, as of August 21, 2020, Corsair had filed registration documents with the U.S. Securities and Exchange Commission (SEC) for a planned $100 million USD IPO.
The list of Corsair's product line includes DRAM and dual in-line memory module (DIMM) memory modules designed for desktop computers and laptops. It also manufactures USB flash drives, ATX and SFT power supply units (PSUs), as well as computer cases, and pre-built high-end gaming PC units. It also makes and provides liquid CPU and GPU cooling systems, computer fans, solid-state drives, audio headsets designed for gaming, headset stands, gaming keyboards, computer mice, mousepads, gaming chairs, microphones, capture cards, and PC components. Corsair has also added RGB lighting to its roster of products as the custom computer industry has experienced an increased interest in this particular feature. So far, Corsair has the biggest share in the market of memory modules by holding approximately forty-four percent. With gaming keyboards, it has around fourteen percent of its market share.
About the Gaming Industry
The gaming industry has exceeded growth expectations as an industry. The original projections in 2020 were slightly over one percent in growth until 2022. Instead, it has grown by approximately ten percent. It is estimated there are at least 2.8 billion gamers worldwide, which sees Corsair moving from twenty-six percent of the market share in 2015 to what is now forty-two percent in 2020, at least for components. In regards to peripherals, Corsair makes up an eighteen percent market share for 2020, which is up from its five percent mark in 2013. Another key factor revolving around the gaming industry and where Corsair fits into the scheme of things is the near $70 billion USD acquisition of Activision by Microsoft. Among members of the gaming industry, this is big news, which sets a whole new stage for companies like Corsair to capitalize on. Although Corsair doesn't design games themselves, it is this company that provides the hardware needed to keep up with the demands gamers continue to thrust upon game developers, as well as the publishers behind them. For as long as there are gamers, as well as developers and publishers who cater to their demands, there will be a need for the computer hardware and software to keep up. Where Corsair fits in this equation is a solid one, which serves as an impression that this company has what it takes to last the test of time for as long as the investors are willing to work with them.
There is also another growing business within the gaming industry that has been gaining ground fast, something which Corsair has been among the first companies to jump on. Through its Gamer Sensei, it offers e-sports coaching and lessons for gamers seeking to improve upon their own gaming performance. Since e-sport games are among the most popular gaming platforms on the market, the desire for gamers to literally improve their own personal performance is not much different than athletes seeking to do the same in their own sporting niche. What Corsair Gaming has done here is add a whole new plane of service on top of the products it makes and sells. This adds sustainability to the company that no other in its class has done so far, at least not at this level. This adds to the appeal that, yes, Corsair (CSCR) stock is worth the long-term investment, at least for now.
Written by Allen Lee
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