Corsair Gaming
It's found considerable success in gaming with its high-end products including cases, headsets, streaming devices, mouses, and keyboards. All over social media, Corsair customers post pictures of their "gaming rigs".
In its S-1 filing, Corsair said it had shipped more than 190 million gaming and streaming products since 1998 with 85 million in the last five years. There are an estimated 2.8 billion gamers around the world and in 2019, they spent a total of $148 billion on video games.
IPO
Unlike many recent IPOs, Corsair had a less than stellar debut. The company sold 17 million shares at $17 but the stock opened finished down 8.5%. In the ensuing days, it's made up these losses and is trading above $17.
The stock's underwhelming debut reflects that there's less interest in companies that are making actual physical products, and more interest in companies creating software and platforms.
In its prospectus, Corsair also identified some risks to its business like a continued increase in mobile gaming, tablet gaming, and cloud gaming. These are the fastest-growing subgroups in gaming. With these, there's less of a need for the expensive components that Corsair sells.
Stock Price Outlook
Corsair has been a beneficiary of the increasing popularity of gaming in addition to e-sports. It sponsors many competitions and esports "athletes". It's successfully created a brand that appeals to hardcore gamers as a higher-end product. This positioning has allowed the company to increase sales in the past couple of years.
However, the company's real success has been in identifying growing niches and creating successful products. However, the company will have to keep executing this strategy to validate its current stock price.
Video games are clearly a booming market given the amount of time spent on the platform, and monetization is slowly increasing. Many might think of Corsair as a way to get exposure to video games, and in the short term, their fates are definitely connected.
However, there are many better options for investors that are higher up on the value chain. Corsair's business is ripe for disruption given the entrenched players in the market like Logitech
Corsair is a hardware business, so there's a limit on how much it can grow and profit. Investors should be patient and wait for an attractive, entry point. It may be successful in developing new products, but it's a bet on the management team executing.
In comparison, video game companies and platforms are higher-margin businesses that can scale higher. Additionally, they are better positioned to capture value.
