Few forms of entertainment are as massive as the worldwide video game industry. Just last year, game developers and publishers took in a whopping $99.6 billion, a number that will likely exceed $100 billion in 2017. Compared to the paltry $38.6 billion made by the film industry in 2016 and an even smaller amount in the music world, the gaming world consistently generates record-breaking profits and revenue.
The games industry isn’t solely composed of game makers. Sure, the studios making the Call of Duties and Candy Crushes rake in the most money. At the same time, gaming peripheral and accessory manufacturers make a small but impressive amount of revenue from billions of die-hard video game fanatics.
Razer is one of the leading companies in the game accessory space. They don’t make games themselves, but they make gaming computers, mice, keyboards, and everything a core gamer needs for the ultimate setup. The company’s products don’t come cheap, but they’re filled with premium features that keep customers coming back for more.
Now, after 12 years of existing in the game business, Razer is going public. Investors will soon have the chance to help the company grow as competitive gaming’s worldwide popularity surges. Yet Razer’s IPO differs from recent tech-focused stock launches in one major way: the American company won’t be listed on any American stock exchange.
Razer is going public on the Hong Kong Stock Exchange.
The California-based company will sell shares of their stock on the Hong Kong Stock Exchange, as opposed to the Nasdaq or New York Stock Exchange. The company originated in nearby Singapore, so listing on an exchange in a nearby country is not without merit. There’s also the fact that the Asian market makes up most of the demand for eSports (competitive gaming), which in turn makes up a sizable percentage of Razer’s business.
Razer wants to raise money to make more products.
Razer will raise anywhere between $400 to $600 million by going public. This money will help them produce more goods, cut costs on existing/future products, and expand their international reach. The company will also explore making peripherals and accessories for video game consoles, a major market where Razer is noticeably absent. As of now, the company strictly makes products for PC gaming. Moving into the console market will help them diversify their product offerings and make more money.
Razer also wants to capitalize on the growing eSports industry. They already market their products to fans and competitors in this space. Yet the competitive gaming industry is adding hundreds of millions of customers and viewers each year. Industry analysts expect eSports-related revenue to exceed $1.5 billion by 2020. By raising enough money and expanding, Razer is poised to capitalize on this growth and become an industry leader in the space.
The company makes roughly half of their revenue in America. The rest of their sales come from Europe and Asia. By going public and expanding, Razer has the chance to increase overseas sales. They can accomplish this by targeting countries where eSports is popular, like South Korea and China. How soon they expand after their IPO, however, is currently unclear.
Is Razer worth investing in?
Like many new tech-focused stocks, Razer isn’t entirely profitable. They made a profit of $20.3 million in 2014, but posted losses ever since. Despite making $392.1 million in revenue last year, the company still lost $59.6 million. It’s worth noting that Razer acquired several companies between those years, including George Lucas’ THX. Raising money could help them streamline their business and become profitable sooner rather than later.
If you want to invest in a growing part of the video game industry, you could invest in Razer when they launch their stock. Just make sure you do some extensive research in the company first. It’s worth noting that you need a broker(age) supporting international stock exchanges to do so. If you’d rather see how the company performs when they go public, or if you want a more “safe” investment in the video game space, you could always invest in game developers instead.