Billion Dollar Unicorns: Razer IPO – Yet Another Story Of A Non-Profit Stock

According to a Newzoo report, the global gaming market grew 7.8% to $108.9 billion in 2017 driven by a 19% growth in gaming on mobile devices. Recently, San Diego-based gaming company Razer, a proud member of the Billion Dollar Unicorn club, went public on the Hong Kong Stock exchange.

Razer’s Offerings

Razer was founded in 2005 by Min-Liang Tan and Robert Krakoff. The idea for Razer came to the two when they wanted to leverage GM, a mechanical high-speed tracking technology, to develop a gaming mouse called Razer Boomslang. Within the next couple years though, their original company, Kärna shut down because of the dot-com bust. Five years later, the two reignited their idea and formed Razer in San Diego. Razer released another gaming mouse Razer Diamondback shortly, which became the top selling gaming product of all time.

Since then, Razer has grown by selling gaming peripherals such as gaming mice, keyboards, audio tools, and controllers, wearable devices such as watches, activity bands, Virtual Reality glasses, and software offerings and laptops. Its innovative platform integrates inputs from leading online Sports athletes and allows gamers to connect their devices and software to its platform.

Recently, Razer expanded into other products. Earlier this year, it bought the smartphone maker Nextbit for an undisclosed sum. Nextbit was founded by Android veterans and was known for its Robin smartphone. Razer is leveraging Nextbit’s technology to launch its Android powered smartphone that is priced at $699. The phone isfocused on gamers and includes features such as Qualcomm’s ultra-speedy Snapdragon 835 chip, 4,000mAh battery, 8GB of RAM, 64GB of internal storage, a microSD slot for expansion, Dual 12-megapixel cameras, and a 5.72 inch, 120hz display that refreshes at a fast speed to ensure smoother scrolling and animation for games.

Razer’s Financials

Despite its impressive technology, Razer has not managed to turn profitable. Revenues have grown from $315 million in 2014 to $320 million in 2015 to $392 million in 2016 – translating to a rather modest 11.5% growth over the past three years. It had reported a profit of $20.3 million in 2014, but since then, losses have grown from $20.4 million in 2015 to $59.6 million in 2016. For the first half of the current year, revenues grew to $198 million, compared with $152.7 million a year ago. For the same period, losses have increased from $20.2 million to $55.5 million.