Shares of Turtle Beach (NASDAQ:HEAR) rose as much as 15.7% on Wednesday morning, reaching that peak right at noon, EDT. The gains followed after a glowing analyst review of the digital audio specialist's prospects.
Oppenheimer analyst Andrew Uerkwitz sat down for a talk with Turtle Beach CEO Juergen Stark and CFO John Hanson, and he walked away impressed by the company's solid story.
"Stronger than expected financial performance in 2018 allowed the company to reduce debt and debt-related burdens faster," Uerkwitz said, continuing:
Management reminded investors that their focus on product quality will translate well into highly defensible market-leading position in console headsets against incumbents and potential new competitors from other segments.
Turtle Beach investors have now enjoyed a 660% return over the last year and a 1,170% year-to-date surge. The company is selling tons of microphone-equipped headsets to players of "battle royale" games, where talking to your teammates is an important part of the gaming experience.
That requirement makes Turtle Beach just about the closest thing to a direct investment in massively successful battle royale games Fortnite and PlayerUnknown's Battlegrounds, both of which were developed and published by private companies.
It's kind of cool to see a multidecade industry veteran like Turtle Beach getting back into the spotlight thanks to spiking interest in its products, but I'm afraid the joy won't last very long. Turtle Beach may have a defensible position against rivals, but what happens when the battle royale trend runs out of steam, or every Fortnite player has snagged a high-quality headset?
For that reason, I'd chalk this up as a temporary bubble rather than a sustainable surge.