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Why You Should Keep An Eye On This Little-Known Playstation 5 Component Maker

·2 min read

Immersion Corporation (NASDAQ: IMMR) is a small-cap stock most investors have never heard of. With over 3,500 patents and a presence in more than 3 billion devices, chances are investors have experienced the company’s leading haptic technology. The company is in the spotlight in 2020 as it's a component maker for the upcoming Playstation 5.

What To Know: Sony Corp (NYSE: SNE) signed a licensing deal for Immersion’s haptic technology to use in gaming and VR controllers. The Playstation 5 controller will feature Immersion’s haptic technology.

Gaming companies have already cited how the haptic technology, which allows gamers to feel weapons and terrain, expands the gaming experience.

During its first-quarter earnings call, Immersion talked growth with the “anticipated launch later this year of the Playstation 5 console leveraging Sony’s license of Immersion’s haptic technology.”

“We believe Sony’s new controller will catalyze increased market demand for advanced interactive haptic experiences and this may lead to additional opportunities for Immersion in the future," the company said during its conference call.

Why It's Important: The Sony controller has received positive press coverage and shows that companies may need to license or pay up to Immersion to help their products stand out.

Sony has been ramping up demand for the Playstation 5, with an expected 9-10 million devices planned to ship in 2020. This is an increase from the prior planned 6 million and represents a great sign since it took the company eight months to ship 10 million Playstation 4s to retailers.

What's Next: Aside from gaming, Immersion is also tackling huge addressable markets in automotive, PC, mobile devices and adult toys. Immersion is working on switching its focus from litigation and licensing deals to more of a recurring revenue model.

Immersion shares are down nearly 50% over the last five years. A new focus on recurring revenue and less patent litigation could help with financials. Cost-cutting measures are believed to make the company profitable by the end of the fiscal year.

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