Summary
The stock price has gone through another rough month at the market getting beaten down back to its IPO price level, marking a great entry point.
We see deep value in Corsair expecting it to hit north of $40 per share again once the macroeconomic headwinds dial down and the EagleTree Capital ownership situation is handled.
The company has positioned itself brilliantly to carve up its market share and benefit greatly from the expected rise of gaming and streaming in the years to come.
onurdongel/iStock via Getty Images I have already covered the company in my last month’s article . Since then, the stock has briefly touched the $20 per share price level which was simply too much for me and I have decided to pull the trigger and have opened a position in Corsair Gaming (NASDAQ: CRSR ).
After seeing the stock picked up by the meme stock crowd and getting pumped into the high 40s during last year, investors have finally had another chance to invest in the company while it is being priced at more reasonable IPO levels.
Corsair is currently facing two main issues, temporary macroeconomic headwinds pushing the stock price down and EagleTree Capital holding a majority stake of the company and waiting for a good opportunity to unload its shares into the market. Still, for investors who are not afraid to be left holding the bag for a little while, I see more than a 100% upside potential for the stock over the course of the next couple of years. Both issues are in my view only temporary, and the fundamentals of the company remain to be strong. The evolution of the product line
I have already discussed the potential of the Corsair brands and the brand recognition it commands, as well as the presence or lack thereof of a moat the company can rely on. However, I feel that I have missed pointing out a very important aspect of Corsair Gamming, the sheer ambition of the product line.
Recently I have dived into Corsair’s registration documentation that was filed with the SEC back in 2020 when the company was going public, and it hides a real gem that shows how the company’s product line and how it has evolved throughout the years. Source: S-1 Registration
We can witness Corsair’s expanse into what seems to be like everything and anything PC, console, and streaming-related. The process took place constantly throughout the last two decades of the business.
I myself recall the 2005 days of them being not much more than a reputable PC components maker. The emphasis on product line expansion has been reaffirmed since the IPO. The company executed the launch of more than 83 different products in 2021 alone. According to management in the latest earnings call, 106 new product line additions are discussed for 2022, adding further to an already rich product line. I’ve never been in a meeting where we decided that 106 is a number to aim for, and we’ll put a bonus number based on 106 because we’re willing to kill a project as well. I mean not everything we design and develop actually makes it to market. It goes through different phases, and it gets closer to when it’s time to come out. If we think it’s really not something that’s going to make as much of a difference as we thought it would when we originally came up with it, we’re willing to stop the product as well. And some products, we try and we try a new market, we try a new idea. Sometimes, we don’t quite hit what the market is asking for. Sometimes, we’re a little bit ahead for maybe in a year or 2, they’ll better understand what this is and be more bought into it. So I think, if anything, you’re going to see more investment into it. As our revenue has gone up and our number of products has gone up, we have to invest more into R&D. So I don’t know how – what the number of products will be, but I know that we’re going to be investing more into what we need to do to come up with more of it. I would argue that the two “big” highlights of the 2021 product additions are the ventures into the $4 billion PC monitor market and the $1 billion strong streaming camera market. The 2018 Elgato acquisition finally started paying itself out tenfold with the successful launch of the Elgato […]
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