A Bull-Bear Look At Turtle Beach

Turtle Beach Corp HEAR stock has been on an incredible run in recent weeks, as the explosive popularity of battle royale games has created a huge demand for the company’s headsets and other hardware. With the stock up 278 percent in the past month, Turtle Beach has earned its fair share of followers, cheerleaders and skeptics.

The Bear Case

On May 15, TheStreetSweeper made the argument why Turtle Beach’s amazing run may could come to a painful end. The unexpected rise in the popularity of “Fortnite” was the primary driver of Turtle Beach’s big first-quarter earnings beat, but the company will be back to reporting quarterly losses in Q2, according to TheStreetSweeper.

Much of the recent move was technical in nature and driven by a massive short squeeze that is already subsiding, according to the short seller. 

TheStreetSweeper said Turtle Beach’s products simply aren’t that great.

“Turtle Beach products did not make the cut among headsets recently rated by Digital Trends, Wiki.ezvid.com, BestAdvisor, IGN and, perhaps most significantly, PC Gamer,” the firm said.

The Bull Case

Wedbush analyst Alicia Reese reiterated her bullish stance on Turtle Beach in a Monday note. Reese said battle royale-style games aren’t going anywhere, and Turtle Beach is well-positioned for impressive revenue growth and margin expansion. The company has a lucrative, untapped market in China, Reese said.  

Battle royale-style gamers tend to gain competitive advantages by interpreting positional audio, making high-quality headsets a must, the analyst said. 

“We think battle royale-style games are gaining traction and attracting a massive number of new gamers to the shooter genre, requiring high quality communications in order to participate." 

Not only is Turtle Beach benefiting from the explosive 78-percent market growth in gaming headsets so far in 2018, but Reese said the company is also gaining precious market share from competitors as well.

What’s Next?

For now, investors are watching and waiting to see if the 270-percent run in Turtle Beach was justified or if it was too much, too fast.

TheStreetSweeper has an $11 price target for Turtle Beach stock, implying 33-percent downside. Wedbush has an Outperform rating and $20 price target for Turtle Beach, implying 20-percent upside.

Related Links:

Wedbush Raises Turtle Beach Price Target After Blowout Q1, Sees Multiplayer, Mobile Tailwinds For Years To Come

4 Reasons Why 'Fortnite' Has Won Over Gamers

Public domain photo via Wikimedia.