On Tuesday, Corsair Gaming Inc. (NASDAQ:CRSR) shares spiked 6.6% before pulling back later in the day for a net intraday gain of 2.26%. The stock received a significant increase in social interest on Reddit, with mentions soaring more than 4,900% over the preceding 24 hours.
On the other hand, trading volume increased to over 6 million, up from the average daily volume of about 3.3 million. Analysts could not associate the surging interest in the company’s shares to any catalysts.
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Moreover, the stock received a rating downgrade from Credit Suisse analysts earlier this month, with a neutral rating. The analysts cited the company’s falling sales, which also missed Street estimates in the most recent quarterly results.
Corsair shares still look undervalued
From a valuation perspective, Corsair shares trade at a P/E ratio of 17.94 and a forward P/E of 14.83, making the stock attractive to value investors. Moreover, analysts expect the CRSR earnings per share to grow by 11.90% this year before rising at an average annual growth of 6.40% over the next five years.
Therefore, the stock could potentially be a compelling option for growth investors. However, with the top line continuing to decline amid the pandemic impact, the current growth projections may not be achievable.
Therefore, it may explain why investors are unwilling to pay a high premium on the CRSR stock, resulting in its cheap valuation.
The 100-hour moving average is a key resistance
Although Corsair shares spiked on Tuesday, the stock pulled back after finding resistance at the 100-hour moving average.
The CRSR stock has managed to break above the key indicator just once since March this year, thereby limiting the upward potential. Moreover, Corsair has surge closer to the overbought conditions of the 14-day RSI, meaning a pullback could be imminent.
As a result, investors can target pullback profits at approximately $26.79 or lower at $24.46, while $31.14 and $33.44 are crucial resistance levels.
Bottom line: there is still time to cash out on Tuesday’s spike
In summary, Corsair shares pulled back significantly after Tuesday’s early morning spike. However, the stock is yet to retest current support levels, leaving room for more downward movement.
Moreover, the stock’s current surge has no notable catalysts apart from speculation on social forums. Therefore, it may not be too late to sell the spike.
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