1337.HK - Razer

[Gregmal]

Just went public. Valuation is kind of obscene, but this is a really unique company that I think is worth keeping an eye on. Company dominates the "gaming product" biz but is starting to scale out. Very loyal customer base and incredibly high quality products. Backing from some respected firms including Intel and Hong Kong BSD Li Ka-shing.

 

Primary biz sells mice, keyboards, headphones, etc and ultra high end gaming PCs.

They just got into mainstream laptops. I knew nothing of who they were but through researching ended up buying one of their laptops and it is hands down the best non-Mac I've ever owned. Versus the Mac it's basically a toss up. Now getting into phones which has not really been a profitable venture for many companies but their products and consumer appeal definitely draw comparisons to Apple. They've also got several platform concepts and have flirted with the whole digital currency thing. Will be interesting to see what they do with their IPO proceeds.

 

The stock and biz at 5B is very rich, but curious if anyone else is familiar with the brand and/or products.

[bizaro86]

No comment on the company, but is 1337 their actual stock symbol? That's hilarious (and clever) if so. Gamers will love that, imo. 

 

Edited: just checked, it is.

[DTEJD1997]

Hey all:

 

Razer generally has a good reputation.  They are a premium brand & product...it is open to debate EXACTLY how good they they...but they are definitely above average.

 

A $5BB valuation?  Is that HKD or USD?

 

Their product sells for a premium price...but 5BB?  wow...that does sound high...

[Gregmal]

Yes that is a 5B+ USD valuation at the moment. They did a round of funding in 2014 or so at a 1B valuation. Where expected to IPO in the spring supposedly at around $2-$3B, and closed out the recent HK IPO at the high end of the range, 92x oversubscribed at a $4B valuation. This is for roughly $400m in sales and current losses of about 40m(although the company was profitable before it started foraying into the mainstream laptop market).

[flesh]

Great products, used them for years for mice and keyboards for online FPS. For high end mice, there's really only razer and logitech.

[johnny]

Their product sells for a premium price...but 5BB?  wow...that does sound high...

 

???

Only a 2x revenue multiple.

 

 

 

2x the revenue of the entire global gaming peripherals market

[Gregmal]

Thought I'd bump this. Been buying this recently as valuation has come back a lot and recently traded at around a $1B EV which is more or less half the valuation it traded at in a recent round of funding prior to IPO.

 

More relevantly, is this not basically a pure play on Esports? I think it's compelling here.

[wisowis]

There is a ton of competition in the keyboard space now. Check out /r/battlestations -- none of the serious gamers use Razer products anymore.

[bennycx]

Agreed. This company has no moat at all. They need to pivot to something else

[Gregmal]

You could make the same moat argument for Turtle Beach. I'm not really interested in the moat aspect, but more so the reputation of the company and how the brand continues to be viewed. I'd be curious to hear why people think this has gone out of favor? They are definitely in the right place at the right time. Maintaining the brand image and executing are key here.