An investment into Corsair Gaming (NASDAQ:CRSR) stock is worth a serious look. It isn’t a definite buy as the gaming company does face challenges, but there’s plenty of upside. CRSR stock now hovers just above its year-to-date low, last week’s $26.16 a share.
The company is clearly in a strong growth environment. So, let’s take a look at what the company does and a look at the growth potential of its environment first.
The Fremont, California company supplies the full spectrum of PC gaming componentry. It sells gaming gear, streaming gear, PC components, gaming PCs and software. As well, Corsair also hosts a community of streamers and sponsors e-sports teams.
In a nutshell, it’s a company dedicated to all things PC gaming. And fortunately for the company its surrounding environment is strong.
Booming Industry Growth Supports CRSR Stock
Corsair Gaming touches on a number of similar industries. You could characterize it as operating in the gaming industry, video streaming, and e-sports. All of those would be fair. And all of those industries are undergoing rapid growth.
The gaming industry is the broadest of those three. Accenture (NYSE:ACN) reported in March notes that the global gaming industry now counts 2.7 billion strong. The world’s population now stands at just under 8 billion. It’s fair to say that gaming has mass appeal.
Gaming is the fastest-growing form of entertainment globally, with revenues increasing at 9%+ per year, according to Roundhill Investments research. Next year, the global video game market is expected to top $190 billion in revenues. E-sports stands to directly benefit from growth in the broader gaming industry.(See ETF note below.)
Research is Telling
Two market research reports from Grand View Research point to similar industry strength in e-sports and video streaming. The e-sports industry, valued at $1.1 billion in 2019, is projected to experience 24.4% compound annual growth through 2027.
Video streaming, valued at $50.11 billion in 2020, is projected to experience 21% compound annual growth between 2021 and 2028.
One of the more interesting insights was that e-sports is becoming so central to today’s culture that universities are now offering degree programs in e-sports. That Grand View Research e-sports report noted that Shenandoah University, Becker College and The Ohio State University each offer an e-sports degree course. (There is a certain irony with Ohio State, as “live” athletics in the most recent full-year of activity generated more than $210 million in revenue for the school.)
Corsair Gaming is seeking enrolled college student brand ambassadors to represent it on campuses. So, it’s clear that many burgeoning opportunities lie before the company. But that alone won’t cause investors to buy CRSR stock.
Strong Earnings Report
Investors can’t invest in a company based on the strength of its industry. But Corsair Gaming has both a strong industry and is itself a strong operator.
In the second quarter the company reported $472.9 million in revenues, up 24.3% on a year-over-year basis. The company separates its revenues into two segments: gamer and creator peripherals; and. gaming components and systems.
The former contributed a relatively smaller $155.2 million to the revenue total. However, that segment showed massive 40.9% growth YoY. Gaming components and systems revenues grew by an also strong 17.6%, reaching $317.7 million.
Gross profits hit $130.4 million. And Corsair Gaming gave guidance of $1.9 billion to $2.1 billion in 2021 net revenues.
Corsair Gaming is a rapidly growing company. It recorded pre-IPO revenues of $1.1 billion in 2019. Those are on pace to nearly double by the end of this year. The company anticipates that in the third quarter, logistics costs should remain high. That can hardly be attributed to any wrongdoing at the company as supply chains remain disrupted.
Corsair Gaming shows rapid growth in revenues but also in pace of innovation. The company launched more than 75 products this year alone.
Takeaway
CRSR stock represents a company in a strong position. Internally, the company looks to be doing most of the right things which showed in its recent earnings report. Its surrounding environment is clearly strong as well. That is where investors should want to be. There’s lots of growth forecast in its future and the company looks to be seizing upon that opportunity already.
The shares are the fourth-biggest holding in the 35-stock portfolio behind the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSEARCA:NERD). That exchange-traded fund has greatly outperformed CRSR in 2021, down 8.97% versus Corsair stock’s 22.34% decline.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.