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Here's How Turtle Beach Stock Rose 33.8% Last Month

By Anders Bylund - Aug 3, 2018 at 1:40PM

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After rising on pure market momentum and speculation linked to a very specific gaming trend, this stock may be overdue for a big correction.

What happened

Shares of Turtle Beach (HEAR 0.17%) gained 33.8% in July, according to data from S&P Global Market Intelligence. The maker of gaming headsets and other digital audio solutions is, in fact, the best-performing tech stock on the market in 2018 with a 1,615% return so far. And it's all thanks to the rise of so-called "battle royale" video games, where a good headset is an important part of the gaming experience.

So what

To be clear, Turtle Beach didn't have much news to share in July. The company did release new lines of gaming-console headsets, and key title Fortnite Battle Royale published a new "season" to keep gamers interested. But neither of these events made much of a difference to Turtle Beach's stock chart. Takeover chatter that painted Microsoft (MSFT -0.23%) as a potential suitor triggered a quick 4% rise near the end of the month, but even that spike was largely lost in the general uptrend.

Instead, the stock simply continued to rise on the considerable market momentum built up over the last few months.

Gamer sitting on a couch, wearing a headset and holding a gaming console controller.

Image source: Getty Images.

Now what

I can't help but wonder what happens to Turtle Beach when the gaming market takes another turn and forgets about the headset-equipped battle royale craze. I hope that the audio expert's management has the common sense to see this inevitable downturn coming, and expand the company into other markets while business is good.

The momentum might keep carrying Turtle Beach investors higher for a few more months, starting with Monday's second-quarter earnings report. But the stock is resting on the popularity of a very specific type of game, in an industry known to discard the latest trend in a hurry. I'm not going anywhere near Turtle Beach's stock until it finds another core market to slide into when battle royale games become old hat.

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Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$252.56 (-0.23%) $0.58
Turtle Beach Stock Quote
Turtle Beach
HEAR
$17.77 (0.17%) $0.03

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