Here’s Why Corsair’s Stock Hurled 15%

“We had $1.3 billion in revenue over the last 12 months and have grown significantly in recent years. There are 2.6 billion gamers in the world, 500 million of them PC gamers, and the vast majority of those have yet to step up to spend money on specialized gear.” — Andy Paul, CEO

A couple days before Thanksgiving, Corsair Gaming stock [$CRSR] plunged nearly 15% from its high of $51.37 after Doug Creutz—analyst at Cowen—downgraded the gaming accessories manufacturer, thanks to its rather toffee-nosed valuation. Corsair is largely known for its power supplies and computer memory designed for high-performance gaming PC’s. The stock has surged 178% since the IPO in September, opening at $17 per share.

Shares culminated at $51.37 last week, then traded at a $34 handle during Wednesday’s session. Newsflash, the stock is no longer trading at a discount to its rival Logitech International [$LOGI]. Still, Creutz said, Corsair remains a strong company, and that he hasn’t changed his view on the executives that run it, or the underlying business. He has since raised his target to $37 from $32. Eleven analysts cover Corsair, and Creutz has it at a Hold while the others have rated it a Buy.

E-sports and game streaming still stand to reap healthy financial rewards for the company in the long run. Like other gaming companies, Corsair has cashed in on the stay-at-home orders during pandy. On Monday, CEO Andy Paul raised his full-year revenue guidance from $1.62 billion to $1.66 billion. Adjusted EBITDA is now expected to land near $197 million, up from $190 million. Backing out of the results from Corsair’s first three quarters, you get a fourth-quarter revenue target of roughly $513 million and adjusted EBITDA profits near $57 million.

Employment at Corsair has doubled over the past few years to more than 2,000 and Paul said he expects that to continue, both through organic growth and acquisitions. About a third of the company’s employees are in Silicon Valley, but the biggest concentration of its work force is at its Taiwan factory. The rest are spread around the world.