Please ensure Javascript is enabled for purposes of website accessibility

Why Turtle Beach Inc. Stock Jumped 14% Higher Today

By Anders Bylund - Updated May 23, 2018 at 4:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Knee-deep in a dramatic turnaround based on "battle royale" gamers buying lots of headsets, the volatile computer sound specialist jumped on nearly no news at all today.

What happened

Shares of Turtle Beach (HEAR -0.99%) jumped as much as 14.2% higher on Wednesday. Investors responded to the sound card and gaming headset maker reshuffling its balance sheet. Turtle Beach's stock ended the day 13.3% above Tuesday's closing prices.

So what

$19.3 million of preferred stock in a Turtle Beach subsidiary was retired near the end of April, removing that liability from Turtle Beach's accounts at a 50% discount. The actual transaction happened a month ago, but Turtle Beach hadn't provided full details on the deal until now.

Adult male holding a gaming console controller and wearing an audio headset.

Image source: Getty Images.

Now what

This is a pretty extreme turnaround story. Turtle Beach was on the verge of being delisted from the NASDAQ exchange for several months, as the stock price had fallen below the required price of $1 per share for more than 30 consecutive days in early November 2017. The stock regained compliance with Nasdaq's listing rules in April, right around the time when the preferred shares were retired.

Today, Turtle Beach shares trade at nearly 10 times their 52-week lows, mostly due to Player Unknown Battlegrounds andFortnite Battle Royale players snapping up lots of gaming headsets. Talking to other players is a key feature of these massive hit games, giving headset specialists like Turtle Beach a unique growth engine.

"We expect the Battle Royale format to have lasting appeal and not be a short-lived phenomenon due to the style of the games and the addition of new participants into gaming," said Turtle Beach CEO Juergen Stark in a conference call with analysts.

If he's right, Turtle Beach will do fine for years to come. If not, these crazy stock-chart spikes could be temporary. Volatility is the name of the game, here -- it took no more than an announcement of financial jockeying to move share prices more than 10% higher today, though the company only saved $20 million. I wouldn't bet the farm on Turtle Beach quite yet.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Turtle Beach Stock Quote
Turtle Beach
HEAR
$13.98 (-0.99%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.