Gaming Stocks: Turtle Beach Corp Shares Tank After Earnings

Gaming stocks are getting killed in 2019, after major companies in the space produced lower-than-predicted earnings for the holiday season. Turtle Beach Corp (NASDAQ:HEAR) shares are tanking nearly -18% today. The audio-technology company released an estimate of lower-than-projected earnings for Q1 2019 and investors aren’t pleased. The audio tech company had a phenomenal 2018, but why does 2019 look so bleak? Let’s find out!

Turtle Beach Earnings Fizzle in 2019

In early February, two major gaming stocks tanked after reporting revenue misses. Shares of EA (NASDAQ:EA) fell -13% after its earnings report miss and Take-Two Interactive (NASDAQ:TTWO) shares fell -14%. Surprisingly, Turtle Beach’s 2018 earnings did not disappoint, but its 2019 estimates have investors scratching their heads.

In early February, the gaming stock rose after Game Stop (private) announced its earnings for the holiday season speculating that a large chunk came from its accessories—with Turtle Beach Headsets being some of their best sellers. At the time, Game Stop didn’t give a definitive answer if it was Turtle Beach headphones that contributed to its high sales but most assumed it was positive news for the audio company.

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Well, it seems Turtle Beach did have a great year last year earnings-wise, but its Q1 2019 projected earnings are below Wall Street’s estimates. Its projected Q1 2019 earnings are the reason behind the sharp drop in the gaming stock today.

In Q4 2018, Turtle Beach brought in $111.3 million, up +40% from the $79.7 million in Q4 2017. Net income was up +73% to $24.6 million. In 2018, net revenue increased +93% to $287.4 compared to 2017’s net revenue of $149.1 million.

Turtle Beach announced the acquisition of Roccat, a computer peripherals company, for $14.8 million in cash. Due to this acquisition, its revenue is expected to dip a bit in Q1. The gaming stock believes Roccat will add to Turtle Beach’s revenue by around $20 million.