Corsair Games: Influenced by Rotting Industry Fundamentals (NASDAQ: CRSR)

SeventyFour/iStock via Getty Images

“Procrastination is like a credit card: it’s so much fun until you get the bill.” – Christopher Parker

Today we put pirate games (Nasdaq: CRSR) In the spotlight for the first time. Much like small caps In the gaming space, stocks have been completely crushed in recent quarters. Is it overselling? We try to answer this question in the paragraphs below.

CRSR . stock chart

Alpha search

Company Profile

Corsair Gaming is headquartered outside of San Jose, California. The company designs, markets and distributes gaming and streaming peripherals, components and systems. Its product offerings include gaming keyboards, mice, headphones, and controllers, as well as capture cards, streaming decks, USB microphones, studio accessories, and EpocCam software. Corsair Gaming also provides gaming components and systems that include power supplies, cooling solutions, computer cases and DRAM modules, as well as pre-built and custom-built gaming PCs. After pulling back in the stock over the past several quarters, the stock is trading just above $15.00 and an approximate market capitalization north of $1.4 billion.

Fourth Quarter Results

On February 8, the company released the fourth quarter Results. The company earned 35 cents a share during the quarter on a non-GAAP basis. Revenues fell by about eight percent on an annual basis, to reach about 510 million dollars. Both numbers well beat the consensus.

Gross Margin of Corsair Games by Business Sector

February company presentation

For the year, the company generated revenue of just over $1.9 billion, a solid increase of about 12% over fiscal year 2020. Net income for the year was $101 million, just below 2020 levels. Adjusted EBITDA was (EBITDA) of $199.2 million in fiscal year 2021, compared to adjusted earnings before interest, tax, depreciation, and amortization of $213 million in the same period last year.

Corsair Gaming Q4 revenue by segment

February company presentation

At the time of the earnings release, management directed between $1.9 billion to $2.1 billion and saw adjusted EBITDA in the range of $205 million to $225 million in fiscal year 2022. Unfortunately, it appears lukewarm guidance may have been optimistic in hindsight. too late. On April 21, management presented the first quarter of 2022 Results. It wasn’t a good idea to underestimate her.

Revenue is expected to be about $380 million for the quarter, down about 28% from the same period last year. Adjusted EBITDA is expected to be between $14 million and $15 million versus adjusted EBITDA of $80.4 million in the first quarter of 2021. The company cited often challenging multiples. The Covid stimulus apparently funded a large portion of Corsair’s sales growth in the first quarter of 2021.

The company is also fighting some frustrating trends in the industry at the moment. After five days of disappointing initial results, it was just that announce Total video game sales in March fell 15% year over year to just over $4.5 billion. It was the fifth consecutive month of declines for the industry and was a sharp acceleration from the six percent decline in February and the two percent decline in January.

Analyst comment and balance sheet

The analyst community remains largely optimistic about Corsair Gaming’s prospects. So far in 2022, five analyst firms, including Stifel Nicolaus and Wedbush, have reissued buy ratings for the stock. Although all five recommendations contain minor revisions to the target price. New price targets introduced range from $22 to $31 per share. Robert W. Bird (target price $27) maintained the stock’s hold rating earlier this year.

Balance Sheet Corsair Games

February company presentation

The company ended fiscal 2021 with just over $60 million in cash and marketable securities on its balance sheet versus nearly $250 million in long-term debt. The goal of leadership is to reduce debt over time. More than a quarter of the shares traded are currently outstanding. There has been no in-stock activity yet in 2022.

to rule

current analysis consensus The company is earning roughly $1.45 per share (within a rough discretionary range of $1.10 to $1.60) as revenue rises very slightly to $1.93 billion. Given the latest preliminary results for the first quarter and video game sales in March, both numbers are likely to be revised much lower in the coming weeks.

Adjusted EBITDA of Corsair

February company presentation

Even before the last big downturn across the industry, Corsair was having a hard time maintaining margins and EBITDA. With lower sales and continuing challenges across the global supply chain, the company is very likely to generate lower revenue and lower profits in fiscal year 2022 than in fiscal year 2021.

While the stock is largely off, it seems likely that the stock will fall further especially in the current dismal market environment. This is confirmed by the large short position in the stock at this time and may explain the lack of insider buying in 2022 despite the stock’s decline. Therefore, we avoid any investment recommendation by this name for the time being despite maintaining optimism from the analyst community.

“If it wasn’t for the last minute, nothing would have been done.” – Rita May Brown

Brett Jensen is the founder and author of articles for the Biotech Forum, the Busted IPO Forum, and the Insider Forum.

Leave a Reply

%d bloggers like this: