Gaming has never been as profitable – or as popular as it is right now, which is great news for gaming stocks like Corsair Gaming (NASDAQ:CRSR).
You may not know that looking at the Corsair Gaming chart, but give it time.
For the last few months, the stock has been consolidating around $34 a share. However, given earnings strength, and the multi-billion-dollar potential of the industry, I’d like to see it challenge prior resistance around $47.50 in the near term.
The Gaming Industry Will Just Grow
Analysts at Newzoo say the global gaming market could be worth $175.8 billion in 2021. By 2023, they added, the market could be worth up to $204.6 billion.
Plus, according to the NPD Group, video game sales were up 30% in the first quarter of the year to $14.92 billion. While April 2021 video game sales dipped 2% from last year to $6.4 billion, year-to-date spending was 21% higher than a year ago.
By May, sales were up 3% year over year to $4.5 billion, according to the NPD Group. That’s massive growth, which could help fuel upside for Corsair Gaming. Granted, there’s speculation video game sales could slow as pandemic fears fade.
However, I wouldn’t worry too much about that. According to Take Two Interactive (NASDAQ:TTWO) CEO Strauss Zelnick, “The pandemic initiated a transformational shift in entertainment consumption. We anticipate that the overall addressable market for our industry will be notably larger going forward than it was pre-pandemic,” as quoted by The Motley Fool.
Corsair Gaming Also Involved In $1.1 Billion Esports Market
Corsair, which supplies gaming equipment for millions of consoles and personal computers, is also benefiting from esports. For one, the esports market is booming, with the viewership expected to double from 335 million in 2017 to 646 million by 2023.
More gamers are also livestreaming. “Nvidia (NASDAQ:NVDA) estimates the number of Twitch streamers doubled in 2020, while Corsair estimates that there were 6 million committed streamers last year. This growing market should support demand for Corsair’s streaming peripherals — microphones, streaming decks, and studio accessories. Again, the company enjoys strong positioning within this niche,” as reported by The Motley Fool contributor Harsh Chauhan.
Corsair Earnings Growth Has Been Just as Impressive
Not only did the company crush earnings expectations, it raised guidance.
The company finished its quarter with a 71.6% year over year increase in revenue to $529.4 million. Adjusted net income was up 420.4% year over year to 58 cents per diluted share from 13 cents. All thanks to sales of gaming components and systems.
Adjusted EBITDA was $80.4 million, a nearly 197% increase from the previous year. Helping, the company had 29 new product launches over the last few months.
Corsair also raised guidance, expecting for net revenue to come in between $1.9 billion and $2.1 billion, from a prior range of $1.8 billion and $1.95 billion. It also expects to see operating income in a range of $235 million and $255 million from a prior range of $205 million and $220 million. It also expects for adjusted EBITDA to fall in a range of $245 million and $246 million from a prior range of $215 million and $230 million.
The Bottom Line For CRSR Stock
Again, gaming has never been as profitable – or as popular as it is right now, which is great news for gaming stocks like Corsair Gaming Inc.
Even better for the stock, analysts at Newzoo say the global gaming market could be worth $175.8 billion in 2021. By 2023, the market could be worth up to $204.6 billion. Demand for games, esports, and gaming equipment isn’t likely to slow after the pandemic. Plus, earnings growth, as seen with Corsair guidance will continue to be strong.
With the CRSR stock, I’d buy it and just let it run. Given earnings strength, and the multi-billion-dollar potential of the industry, I’d like to see it challenge resistance around $47.50 in the near term.
On the date of publication, Ian Cooper 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.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.