After warning about the short-term negative impacts on the business, Corsair Gaming, Inc. (NASDAQ: CRSR) hit the revenue estimate, along with a slight miss on the earnings. This article will look at the current ownership structure, as it might help the investors understand the stock's long-term prospects.
Q3 Earnings Results
- Non-GAAP EPS: US$0.16 (miss by US$0.08)
- GAAP EPS: US$0.02 (miss by US$0.14)
- Revenue: US$391.1M (in-line)
- Revenue Growth: - 14.4% Y/Y
Despite the market digesting most of the news days in advance, the stock still had a very volatile market open, rallying as much as 7.5% before retracing. The role of the bigger picture from 2020 is now becoming evident, as every parabolic move has a retracement. While the company benefited immensely from the 2020 lockdowns, it is currently suffering due to logistics challenges and component shortages.
Yet, investors should reconsider their positions. While short-term speculators might find their capital better employed elsewhere, long-term investors might consider patience. Exuberant optimism that leads to moves like seen one-year ago is unsustainable. On the other hand, one should carefully examine whether the short-term declines result from unwarranted pessimism, market impatience, or fundamental changes within the company.
Examining the Current Ownership
Corsair Gaming isn't enormous, but it's not particularly small either. It has a market capitalization of US$2.3b, which means it would generally expect to see some institutions on the share registry. In the chart below, we can see that institutions are noticeable on the share registry.
What Does The Institutional Ownership Tell Us About Corsair Gaming?
Institutions typically measure themselves against a benchmark when reporting to their investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
As you can see, institutional investors have a fair amount of stake in Corsair Gaming. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation with institutional investors. They, too, get it wrong sometimes. If multiple institutions change their view on a stock simultaneously, you could see the share price drop fast. It's, therefore, worth looking at Corsair Gaming's earnings history below.
Hedge funds don't have many shares in Corsair Gaming. Our data shows that the largest shareholder is EagleTree Capital, LP, with 58% of shares outstanding. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 2.8% and 2.8% of the stock. Andrew Paul, the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock so that you could look into forecast growth quite easily.
Insider Ownership Of Corsair Gaming
Insider ownership is positive when it signals leadership is thinking like the actual owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own some shares in Corsair Gaming, Inc. This is a big company, so it is good to see this level of alignment. Insiders own US$82m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 24% ownership, the general public has some degree of sway over Corsair Gaming. While this size of ownership may not be enough to sway a policy decision in their favor, they can still make a collective impact on company policies.
Private Equity Ownership
With ownership of 58%, private equity firms can play a role in shaping corporate strategy with a focus on value creation. Some might like this because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taken the company public.
After swinging to extreme optimism a year ago, the stock is now experiencing the other side of the medal. Long-term investors should remain patient and keep track of institutional and private equity/venture capital ownership dynamics. Positive trends between those 2 groups should provide comfort.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for Corsair Gaming that you should be aware of before investing here.
If you would prefer to discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.