HEAR

Turtle Beach Corp

TMT, Consumer


Presented:04/29/2020
Price:$10.08
Cap:$0.15B
Current Price:$15.17
Cap:$0.31B

Presented

Date04/29/2020
Price$10.08
Market Cap$0.15B
Ent Value$0.16B
P/E Ratio10.02x
Book Value$4.38
Div Yield0%
Shares O/S14.50M
Ave Daily Vol401,058
Short Int20.18%

Current

Price$15.17
Market Cap$0.31B
Turtle Beach Corp. engages in the development, commercialization, and marketing of audio peripherals. The company was founded by Elwood G. Norris and James A. Barnes in 1975 and is headquartered in San Diego, CA.

Publicly traded companies mentioned herein: Alphabet Inc (GOOGL), Apple Inc (AAPL), Best Buy Co Inc (BBY), FitBit Inc (FIT), GoPro Inc (GPRO), Turtle Beach Corp (HEAR) 

Highlights

The presenter is long shares of Turtle Beach Corp (HEAR), viewing it as a direct way to invest in a secular trend in the video game industry, rather than investing in traditional publishers. HEAR is a leading manufacturer of gaming headsets and audio accessories, with an ~40% market share of U.S. console headsets. Investors became aware of HEAR when its sales almost doubled in 2018 due to the company’s ability to capitalize on the Fortnite/PUBG battle royale craze. Shares traded from LSD to a peak of $35, retraced the gains and now trade for ~ 10. Prior to the outbreak of COVID-19, management indicated (Q2 2019 earnings call) that by investing in verticals outside of gaming headsets (PC accessories) and expanding internationally, they could realize top line growth of 15% - 20%. He believes it's unlikely that it gets the same multiple due to cylicality, but it could attain the same price over the next two years due to secular tailwinds, investments in new verticals, and international expansion. In the near term, using a reasonable hardware EBITDA multiple, he thinks the stock could potentially trade up to $20.00/share, which represents ~100% upside from its current price.

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Idea Discussion

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