2nd review round
Back on 20th January 2018, I shared a very personal opinion blog about a company I really liked. Looking back now, I was very biased about it. I even named it as my millionaire stock which would bring me to retirement if it capitalised. This is a peripheral gaming company called Razer (1337.hk), started by a Singaporean lawyer who was approximately my age (late 30s). This company had a good collection of loyal followers who have tattooed the logo onto their bodies, a baby named after the company and a company loved by gamer (including myself a retired gamer).
Fall of Razer from IPO
Since my recommendation, Razer has dropped from HK$3.4 to a low HK$1.01. As I am writing, Razer shares closed at HK$1.72 today (09/04/2019). Apologies to readers who have lost more than 60% following my article. I personally have lost money too, as unrealised loss. I still own the shares and not lose money until I sell these shares.
Previous Jan'18 Analysis
Today April'19 Analysis
The share price may have dropped 60% but the company have definitely moved on at a really fast growth with the public investors’ money.
It truly shows the company’s objective is to please its customers and expanding well to grow market and products. Winning shareholders and investment is not on their agenda which reflects on the share price.
From the June 2018 data, 12 months after their IPO, the company have grown in sales, revenue, improved margins. However, the net loss has grown increased by 9% to -$57m. The company have yet made a profit despite increase turnover and growing customer base. Remember Amazon never made a profit for the first 6 years while the customer base was multiplying each quarter.
Razer Sharp Marketing
One major point which cannot be reflected on investors P&L charts is the marketing strategy of the company. The brand, logo and the CEO are still growing day by day. The company is reflecting a real-life personality.
Razer is not Logitech.
Razer is not Dell.
Razer is not Apple.
Razer is not Microsoft.
Razer is Razer.
This is a company who is trying to build its personal brand with a story driven by its CEO, Mr Tan Min Liang a qualified Lawyer, growing up in the ’80s and ’90s with video games in his blood, like every Gen Y and early millennials. Very closely linked with social media and very well connected with the people. Just like Kylie Jenner and Taylor Swift on Instagram and Twitter. The word of mouth is spreading faster than its adverts. This clearly reminds me of Apple in the early ’90s with their loyal followers despite the dominance scale of Microsoft. People will always relate Razer to Tan, just like Apple to Jobs.
Is Razer still my millionaire Portfolio?
Yes, I am taking this opportunity to buy more over the period. This is my long term plans so looking beyond 10-20 years before any expectation of real profit growth. As long as I keep my high-risk shares under 10-15%, my portfolio diversification is healthy. For example, if my portfolio grows to £750,000, my Razer shares should not be more than £75,000 wholly invested.
Worse case is Razer goes Bankrupt and the shares go into zero value (administration). I lose £75,000 (as an example from above). I would still have a £675,000 investment at hand. Razer could go from a peripheral company into a leading brand competing with Apple, Asus, Samsung, Microsoft which potentially would propel them into a new dimension of multiple folds.
The share sits at £1.7 per share at a capital of under £2bn. This current valuation is lower than the following
* a high debt oil and gas start-up
* online clothing store
* start-up fintech company
* funding circle
In my very bias opinion, Razer is undervalued. They technologically push product out to customers rather than compete with rivals on what is the current trend. They have products which win awards and top reviews.
Should you invest in Razer Shares?
You need to satisfy these three conditions before you can invest in Razer as it is NOT for everyone!
-You are a gamer at heart and understand this industry.
-You have a portfolio space to allow max 10% high-risk shares
-You can hold Razer for a long term of more than 15-20 years.