3. Corsair Gaming, Inc. (NASDAQ:CRSR)
Share Price Performance Since July 2021 Start: -68.5%
Number of Hedge Fund Investors In Q1 2024: 12
Corsair Gaming, Inc. (NASDAQ:CRSR) is one of the oldest companies on our list as it was set up in 1994. It sells video gaming accessories such as keyboards and mice. Therefore, the firm is on a much more stable footing fundamentally when compared to most of the stocks that WallStreetBets bought in 2021. Corsair Gaming, Inc. (NASDAQ:CRSR)’s shares also soared in 2021 on the back of equally strong fundamentals that were driven by a greater demand for personal computing products due to the pandemic lock downs. Naturally, the stock also generated hype on social media. The 162% share price gain between its listing in September 2020 and February 2021 proved that Corsair Gaming, Inc. (NASDAQ:CRSR)’s decision to expand into the live streaming gear market through a 2018 acquisition was well timed. Its revenue and earnings of $556 million and $0.53 respectively during the fourth quarter of 2021 smashed analyst estimates of $528 million and $0.46. Its shares soared by 30% in June 2021 after trading volume exceeded 20x the daily average. Retail investors had discovered that Corsair Gaming, Inc. (NASDAQ:CRSR)’s short interest back then was 18%, and they worked together to inflict massive blows on hedge funds. However, as the pandemic trends have died down, and the personal computing market has struggled amidst aggressive interest rate hikes, the shares have now returned to reasonable valuation levels.
Since it had some fundamentals to fuel its valuation, Corsair Gaming, Inc. (NASDAQ:CRSR) had a good first quarter. During the earnings call, management shared:
2024 is starting out as expected with new products driving a rebound in peripherals growth. Our Gaming and Creator Peripherals segment has continued its impressive performance, achieving 20% year-over-year revenue growth in the first quarter of 2024 after 16% year-over-year revenue growth in the fourth quarter of 2023. We are very pleased that growth is coming from all product lines. This was across Elgato with its popular Stream Deck products, SCUF Gaming with the successful recent launch of PC controllers, and Corsair peripherals with several new keyboards, headsets and mice. We were particularly pleased to see the gross margin lift to 40% with these new product launches.
We fully expect to build on this momentum over the coming quarters with an exciting lineup of planned product launches, some of which we will discuss on the call today. Demand was more subdued in the component market as is normal in this stage of the GPU cycle. In the short-term, the self-built PC market is stable with the next surge expected in late 2024 and 2025, when next-gen GPUs and CPUs are launched. We are also already seeing some benefit in the pricing of our most popular DRAM modules as gamers are using higher DRAM capacity for faster gameplay. Give you a sense of how big the memory opportunity is, it is estimated that 95% of steam gamers have less than 16-gig of memory in their systems. That represents a huge opportunity for us. We continue to have high market share in the component space, which we are focused on further growing, led by a strong planned product launch schedule, including several recent launches with our 2500 & 6500 Series Cases, iCUE Link RX Series Fans, and CORSAIR ONE platform upgrade.
