Wen 丨 those things about the Internet
Razer, known as the "first share of Hong Kong e-sports" and "e-sports Hermás", recently released news that it decided to delist from the Hong Kong Stock Exchange at a price of HK$2.82 and will pay up to HK$10.788 billion to achieve privatization.
Razer, which had been losing money for three years before listing, finally ushered in a profit in 2020, but the long-term downturn in the stock price did not satisfy investors.
According to the data, as of the close of trading on January 12, 2022, Razer was quoted at HK$2.22 per share, with a market value of HK$19.447 billion.
In addition to the downward stock price, there are nearly 90% of the single revenue from mouse hardware, when the e-sports market is in full swing, why is Razer struggling? Will delisting solve the problem? How will privatized Razers move into the future?
And look at the breakdown of this article.
Focus on high-end players, but the stock price has been going all the way down
Like the net fish internet café that plays "high-end players come to the net fish", Razer is also positioned as a "high-end e-sports hardware manufacturer", whether it is an Internet café or a mouse, it should be "prosperous" with the gradual heat of the e-sports market.
But interestingly, in November this year, the League of Legends World Championship Chinese team EDG won the championship, becoming the most widely participated and gold-containing trophy in the history of the Chinese team, according to Bilibili data, the highest number of real-time online viewers of the final was the highest than 70 million.
However, the Internet café and mouse that are born with e-sports have not had too many waves, which makes people wonder that the story of the e-sports industry cannot be told?
According to the data, in 2005, Chen Minliang and Robert Krakoff co-founded Razer and set up dual headquarters in the United States and Singapore.
From the beginning of its birth, Razer has played a "high-end e-sports hardware manufacturer", and its notebooks, keyboards and mice and other products are about 30% higher than the average of its peers, and the cost-effective products are not in Razer's product matrix.
In November 2017, Razer landed on the Hong Kong Stock Exchange, from the price of HK$3.88/share to HK$5.49/share, an increase of up to 40%, with a market value of up to HK$40.5 billion, but Razer, which was supposed to start, went all the way down from the peak stock price to the lowest below HK$1/share.
After the listing, in order to save the depressed stock price, Razer also organized a number of repurchases, but mostly maintained between 2-3 Hong Kong dollars / share, and now the market value is almost waist.
One can't help but wonder, what happened to Razer?
Razer Dilemma: The Lost "High End"
Razer's "high-end" concept is not actually tied to performance.
According to the data of Tianyancha, Razer achieved negative net profit from 2015 to 2019, with a cumulative loss of 2.87 billion yuan. In 2017, when it went public, Razer lost 1.072 billion yuan.
After the listing, Razer's loss narrowed, but it still did not work well, and in 2019, Razer still lost 587 million yuan.
What's more, Razer, which has struggled for many years, has ushered in its own revenue bottleneck.
According to Razer's financial report, Razer's revenue in the first half of 2020 was 3.168 billion yuan, an increase of 29% year-on-year, and less than 30% for the first time. During this period, Razer Gross Profit grew at an annual rate of about 10.9%, which is about to fall out of double digits.
According to the data, Razer's revenue in the first half of the year was 4.858 billion yuan, an increase of 53.32% year-on-year, and achieved the first positive net profit attributable to the mother since its listing.
However, Razer did not regain the lost confidence in the capital market, and in October, Razer's stock price even fell to a low price of 1 Hong Kong dollar per share.
In fact, it basically reflects the capital market's doubts about Razer.
The doubts about Razer are not unreasonable, first of all, the data comparison from the old rival Logitech.
According to the data, as of September 30, 2021, Logitech's revenue and gross profit growth were both above 25%, with a total market value of 13.168 billion yuan, and the total market share in the global game peripheral field was 16%, and Razer was 11%.
Logitech and Razer positioning is relatively different, Logitech is more good at working on products, product lines involve high, medium and low multiple price points, involving office, wireless, games and other use scenarios.
Razer, on the other hand, is more focused on the game field and is positioned as a game life brand, mainly providing players with an integrated ecosystem of hardware, software and services.
For example, in the recent League of Legends Finals, Razer provided mechanical keyboard service support for EDG.
According to public data, Logitech has occupied 50% of the market share of computer peripherals in the global market, and from a realistic point of view, the product line is more comprehensive, and Razer is more focused on the game field.
Secondly, compared with Logitech's continuous investment in research and development and continuous production of new products, Razer is slightly better at marketing.
According to the data, as of June 30, 2021, Razer's research and development expenses were 198 million yuan, but the sales and distribution expenses were as high as 554 million yuan in the same period.
In the past three years, Razer's marketing expenditure has been 388 million yuan, 372 million yuan and 364 million yuan respectively, and as a technology company, the "heavy marketing light research and development" operating model has basically taken shape.
Ecological transformation: the concept is louder and the sound is smaller
Razer is also trying to transform to change the worries of the moment.
According to the data, Razer's current revenue is mainly divided into two major businesses: hardware business and software services.
In terms of revenue composition in the first half of 2021, Razer hardware business revenue is 678 million US dollars, accounting for more than 90% of total revenue.
The software business that was vigorously developed in the early years currently accounts for only 9.6%, and Razer's e-wallet Razer Pay has also been shut down because it has not been photographed by Singapore Digital Bank.
However, in the current software market with serious internal involvement, on the one hand, various software services are close to saturation and there are many giants.
On the other hand, the channels from hardware manufacturers are suppressed, and although the concept of diversification is loud, it is very difficult, and Razer wants to take this road.
According to the data of iResearch Consulting's "2021 China E-sports Industry Research Report", China's e-sports market has maintained a high-speed growth trend in 2020, with the scale of users exceeding 500 million, and the overall market size has approached 150 billion.
Even in the current era of "cloud players", e-sports is still a booming industry. With the gradual standardization and improvement of the e-sports market, the upstream and downstream of related industries are bound to usher in a round of breakthroughs.
Seeking truth from facts, after the diversification effect is very small, first of all, after the privatization of the current Razer, with its specialization in the game field, "turning" to the giants in the game field, forming an "ecological closed loop", just like Apple won beats that year, Razer may have a second chance of growth.
Second, it is to seek more possibilities on the product side.
According to media reports, on December 2, 2021, Razer announced that it jointly released the first game handheld development kit based on Snapdragon G3x chips with Qualcomm, intending to enter the handheld market, choosing to take Qualcomm and compete with Switch, which is a new growth direction.
After privatization, Razer's next move will remain to be seen.