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Corsair Stock Can’t Overcome Its Reliance on Meme Money

Corsair (NASDAQ:CRSR) is in a competitive sector, and its latest major initiative may not be very successful in moving CRSR stock higher.

corsair keyboard zoomed in on the logo

Moreover, the company’s sales could be hurt by the reopening of economies, and its status as a meme stock does not bode well for its outlook of CRSR stock in the current environment.

On the other hand, in the wake of the shares’ recent pullback, the stock’s valuation is not excessive,

Corsair develops products that are used in conjunction with computer games and streaming systems, including “mice, headsets, and controllers, as well as capture cards, stream decks, USB microphones, {and} studio accessories.”

It also sells memory storage products and gaming PCs.

That sounds like a very competitive, rather commoditized category. In other words, there are many firms in the sector, and, in general, there’s not too much they can do to differentiate their products from those of their competitors.

Put another way, none of Corsair’s products is likely to be disruptive or tremendously better than every competing offering.

Additionally, I know that Logitech (NASDAQ:LOGI), whose market capitalization is nearly $18 billion, versus Corsair’s $2.4 billion, is a leader in the computer accessories space.

Indeed, although Corsair reportedly has an impressive but not overwhelming 41.9% share in the PC component space, its share of the gaming peripheral market is only 18.3%, InvestorPlace Writer William White reported in June.

A Closer Look at CRSR Stock

On the initiative front, CEO Andrew Paul, speaking on the company’s Q2 earnings call on Aug. 3, seemed to place a great deal of emphasis on the company’s new high-end webcam, Facecam.

But high-end webcams are a very competitive space; indeed, Logitech offers many of them.

Two top ten lists of webcams, published this month, had widely different ratings on Corsair’s Facetime.

Specifically, tomsguide did not include Facetime in its list, while techradar rated it number two overall and, in a close race, the best webcam for streaming.

But techradar did lavishly praise Facetime, saying that it is “beautifully optimized for the streaming community, with some of the best software we’ve ever seen on a webcam to boot.”

The website, however, did note that anybody searching for just a webcam will view Facetime as “a half-baked product” due to its lack of a microphone and an autofocus mechanism.

Likely Downside From Meme-Stock Weakness

Although the delta variant of the novel coronavirus has slightly slowed the reopening trend, I do not expect the reversal to be very powerful or long-lasting. Many experts expect the delta variant to soon peak in the U.S.

On Aug. 6, Investor’s Business Daily reported that people aren’t playing video games as much in the wake of the reopening.

Also likely to hurt CRSR stock going forward is the weakness of meme stocks that began earlier this summer.

Multiple trends like the lack of new direct government stimulus and the upcoming termination of the federal unemployment bonus is likely hurting meme stocks. Corsair has fallen 16% in the last three months.

I expect the weakness of meme stocks to continue for at least the next few months.

The Bottom Line on CRSR Stock

Corsair’s valuation is more attractive than any meme stock I’ve seen. Specifically, its forward price-earnings ratio is just 14.8 and its trailing price-sales ratio is only 1.2, according to Yahoo Finance.

Still , given the company’s many challenges, I advise investors to sell their shares of CRSR stock at this time.

On the date of publication, Larry Ramer 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.

Article printed from InvestorPlace Media, https://investorplace.com/2021/08/corsair-stock-cant-overcome-its-reliance-on-meme-money/.

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