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Understanding Immersion Corp’s Risk Factors

Immersion Corp’s (IMMR) touch feedback technology solutions for mobile, automotive, gaming and consumer electronics create immersive and realistic interactions for consumers.

Let’s take a look at its recent Q2 performance and understand what has changed in its key risk factors that investors should know.

Growth in royalty and license revenue helped Immersion increase its top line 94.2% year-over-year to $11.01 million, beating consensus by $260,000.

Operating expenses declined 23% year-over-year to $5.2 million. Earnings per share stood at $0.17, beating consensus by $0.11 per share. The company had reported a net loss of $0.03 per share a year ago. (See Immersion Corp stock chart on TipRanks)

The Interim CEO of Immersion, Jared Smith, said, “The results that we are reporting reflect the continued success of our customers and partners in developing and shipping high-performance haptic products and solutions in the automotive, gaming, and mobile market segments.”

On August 17, Colliers Securities analyst Derek Soderberg reiterated a Buy rating on the stock with a price target of $15, implying 118.7% upside potential.

Soderberg said, “We continue to believe that the PS5 is a breakthrough for Immersion’s haptics technology, setting the company up to benefit from increased penetration of haptics technology across multiple end markets for years to come with an efficient and predictable operating model.”

Now, let’s look at what’s changed in the company’s key risk factors.

According to the new Tipranks’ Risk Factors tool, Immersion’s main risk categories are Tech & innovation and Finance & Corporate, which account for 33% and 25%, respectively, of the total 40 risks identified. Since June, the company has added two key risk factors.

Under the Production risk category, Immersion notes that a shortage of electronic components could affect its revenue. Immersion receives royalties from customers based on the sales of products incorporating its technology.

In the wake of the recent global shortages of electronic components, including integrated circuits, Immersion’s customers may experience lower product shipments, which may affect its revenue and, in turn, business and stock price.

Under the Ability to Sell risk category, the company acknowledges that if customers discontinue product lines that incorporate its technology then Immersion’s operating results may be adversely impacted.

The Tech & Innovation risk factor’s sector average is at 17%, compared to Immersion’s 33%. Shares are down 36.2% so far this year.

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