Corsair Gaming (CRSR) is known for its gaming components and equipment including streaming gadgets, mouses, keyboards, and headsets. The company was founded in the early 90s, selling memory but then quickly branched out into other PC hardware like…
power supplies, storage products, PC cases, and cooling systems. Now, it also builds high-end PCs.
Over the past decade, CRSR’s business took off as its premium products were a hit with gamers. The company has been a beneficiary of gaming’s increasing popularity.
Corsair is going public with a valuation of $1.7 billion. It’s hoping to raise around $250 million as shares are slated to open around $18. Its S-1 filing reveals that in 2019, the company generated $1.3 billion in revenue and earned a profit of $31 million.
The Boom in Gaming
Video games are a serious business. In 2020, it’s estimated that a total of nearly $160 billion will be spent on gaming, and this amount is expected to grow at a 9% CAGR over the next decade.
Within video games, esports’ popularity continues to increase with a total viewership of 645 million expected in 2022. Also, younger people are drawn to esports, so its commercial impact will likely continue to grow in the coming years.
One massive catalyst for CRSR is that it has a strong market share in a fast-growing market. In the US, it has an 18% market share of peripherals and 42% market share of gaming PC components. It’s also the number 1 seller of memory, cases, power supplies, and “streaming gear”.
Corsair’s Major Competitor – Logitech
CRSR does have several competitors with its major products – memory, PC components, and gaming peripherals. The largest and most well-known is Logitech (LOGI – Get Rating). Its stock has been an outperformer since the March lows as the coronavirus resulted in a boom in the sale of its products with more people working and learning from home in addition to the increase in gaming.
The POWR Ratings are also bullish on LOGI as it’s rated a Strong Buy. It has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. Among Hardware stocks, it’s ranked #7 out of 28.
LOGI’s stock price has been a long-term winner as it’s up more than 1,400% over the last seven years. In the short-term, it’s up nearly 150% from the market bottom in March and has been making new, all-time highs monthly since May. This type of relative strength is one characteristic of a “leading stock” in a bull market.
Bull Case for CRSR
LOGI benefited from a secular tailwind in the increasing popularity of gaming and a cyclical tailwind due to a pandemic which led to a sharp increase in demand for computer accessories. Investors in CRSR hope that these same trends will power the stock.
CRSR’s bull case is that…
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