Miss for Glu Mobile, Inc. (NASDAQ:GLUU) but Shares Rise

Glu Mobile, Inc. (NASDAQ:GLUU)

Glu Mobile, Inc. (NASDAQ:GLUU)

Today Glu Mobile, Inc. (NASDAQ:GLUU) reported a loss of $23.6 million for Q2 2017, but its stock price gained over 5% on the news. The San Francisco, CA-based company said it had a loss of (-$0.17) cents per share. The results missed analyst consensus expectations for a loss of (-$0.10) cents per share. The mobile game maker posted Q2 revenue of $68.7 million. Glu Mobile’s adjusted revenue was $82.5 million, which beat consensus forecasts of $72.5 million. For Q3 2017, Glu Mobile expects revenue in the range of $78 – $80 million. The company expects full-year revenue in the range of $307 million to $312 million.

Glu Mobile, Inc. (NASDAQ:GLUU)
One month daily candlebar chart for GLUU

Glu Mobile, Inc. (NASDAQ:GLUU) develops and publishes games for smartphones and tablets. Glu’s audience covers five areas – social networking, food, home, sports, fashion, and action. Some of its games are brands, such as Contract Killer, are developed by the company. Other games are celebrity focused such as Gordon Ramsey’s DASH. Sales are generated through digital storefronts that provide direct-to-consumer channels.

In November of 2016, Nick Earl was named as the new CEO. The motivation for the change was the lack of revenue growth in a hot sector. Sales grew from $223.1 million in 2014 to just $249.9 million in 2015, then dropped to $200.6 million in 2016.

Thomas jettisoned the celebrity branded games which sucked royalty revenue from the firm (Taylor Swift being the lone survivor), and re-focused Glu’s creative team on developing new games. Thomas is betting on the creativity of Glu Mobile, Inc. (NASDAQ:GLUU) employees to return the company’s stock to its upwards trajectory. Thomas brought in Mike Olsen to achieve that goal. Olsen had been running the Electronic Arts team that developed Star Wars: Galaxy of Heroes – EA’s #1 grossing game. Competition in the $40 billion mobile gaming space is fierce and developing popular games that can go viral can cost a lot of money – creative talent has often been the black hole through which funds disappear, never to return.

This year, Glu Mobile, Inc. (NASDAQ:GLUU) shareholders have fared well. YTD, GLUU stock is up almost 50%, and is up over 26% for the year. Today’s closing price established a new 52-week high – a price above the listed consensus target price of $2.87. Three analysts rate the stock as a “Strong Buy” and two rate GLUU shares as a “Hold”.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

Author: Steve Clark

Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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