Why Turtle Beach Stock Rocketed 216% in May

What happened

Turtle Beach (NASDAQ: HEAR) stock rocketed up 216.4% in May, according to data from S&P Global Market Intelligence, dwarfing the S&P 500‘s 2.4% return for the month. Shares of the gaming headset maker have continued to move higher in June, bringing their year-to-date 2018 gain to a whopping 1,010% through Friday, June 8.

Image source: Turtle Beach.

So what

Turtle Beach stock’s huge May gain was driven by the company’s release on May 9 of strong first-quarter 2018 financial results, along with management significantly increasing its full-year 2018 guidance. The stock soared nearly 65% the following trading day and continued to climb the remainder of the month.

In the first quarter, Turtle Beach’s net sales surged 185% year over year, to $40.9 million, while net income came in at $2.0 million, or $0.16 per share, compared to a net loss of $9.9 million, or $0.81 per share, in the first quarter of 2017. For full-year 2018, management now expects revenue to increase 37% year over year to about $205 million, up from its $157 million outlook issued in March. And it now projects earnings per share (EPS) of $0.95 versus a loss of $0.26 per share in 2017. Its previous guidance was for a loss of $0.12 per share.

Turtle Beach’s growth is primarily being driven by the phenomenal popularity of Epic Games’ Fortnite Battle Royale and PUBG Corp.’s PlayerUnknown’s Battlegrounds (PUBG). Communicating with other players is important in these battle royale genre video games, which are survivalist games where the last person standing wins, so players need headsets.

Now what

Where Turtle Beach’s stock goes from here will heavily depend upon whether the battle royale gaming craze has staying power.

One thing that’s certain is that Turtle Beach stock is very volatile, making it only suitable for investors with high risk tolerances.

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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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