Glu Mobile, Inc. (NASDAQ:GLUU)

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

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.

Is It The Time To Invest In Glu Mobile Inc. (NASDAQ:GLUU)?

Glu Mobile Inc. (NASDAQ:GLUU)

Glu Mobile Inc. (NASDAQ:GLUU) has a broad portfolio of revenue recording games to deal with any downside risk. However, the stock has remained subdued in the last couple of years. After few hit games, the company has failed to record any success with its latest games.

The update

Glu Mobile Inc. (NASDAQ:GLUU) stock has been trading below $2 for the last year. Does it indicate that shareholders are running away from the stock? The investment thesis on the company isn’t that clear, yet most shareholders complicate the issue. At a market cap of around $300 million, the stock seems cheap trading close to $2. The current business offers a safety net notwithstanding the recent history of unsuccessful games. Bookings made in last year were mostly based on games and franchises published prior to 2015.

Even a new moderately successful new game would result in considerable growth in revenues and bookings. Right now, the company has a solid base about $200 million in yearly bookings. For Q4, as many as $17.7 million of bookings were recorded from games launched in 2014 or prior. Also, the balance sheet is impressive yet the cash balance won’t be same in 2017. The firm predicts closing 2017 with cash of more than $60 million and no debt.

Glu Mobile Inc. (NASDAQ:GLUU) will burn through $40 million of cash this year due to, in part, the restructuring expenses of about $5 million and royalty payments taken forward from Q4 to 2017. The previous plan was to close 2016 with cash of $80 million on the balance sheet indicating the real cash burn for the year is about $20 million – deferred royalty payments were about $6 million.

At the center of the analysis, the enterprise value is at almost $215 million when company stock drops to $2 or below. The firm anticipates bookings of almost $220 million for this year placing the shares at an EV multiple less than 1x bookings.

With a new CEO, there are many catalysts that can support the up move in stock. The ability to make Taylor Swift into a hit and inverse the course on the celebrity groups or any other game always prevails. The previous CEO was unsuccessful at taking preliminary hit concepts broader success by failing to revolutionize on future game versions.

Glu Mobile Inc. (NASDAQ:GLUU) stock traded on exceptionally high volume in yesterday’s trading session, as the stock jumped 0.88% to close the day at $2.28. On the day, the stock recorded 11.04 million shares exchange hands on 13,530 trades.

4/05/2017
Ticker Symbol GLUU
Last Price a/o 3:21 PM EST  $2.28
Average Volume 5.25M
Market Cap (mlns) $ 300.80M
Shares Outstanding (mlns) 131.93M
Share Float (mlns) 104.59M
Inside Ownership 1.00%
Short Float 12.69%
Short Interest Ratio 2.53
Quarterly Return 14.00%
YTD Return 17.53%
Year Return -23.75%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Can Glu Mobile Inc. (NASDAQ:GLUU) New CEO Turn It Around?

Glu Mobile Inc. (NASDAQ:GLUU)

Glu Mobile, Inc. (NASDAQ:GLUU) shares are bucking the recent broad market downtrend. Over the past four days, GLUU shares have gained over 10% from their inter-day low of $2.01. Today shares opened at $2.10 and are trading around $2.20 on volumes that are over twice their daily average. The San Francisco, CA-based firm had its shares trading just short of $7 in 2015 before a slide down to $2 – a level which seems to be providing support for the last year. In November, a new CEO was brought in to turn its fortunes around.

Glu Mobile, Inc. (NASDAQ:GLUU) is a developer and publisher of games for smartphones and tablets. Glu covers five genres: social networking, food, home, sports, fashion, and action. Some of its games are brands developed by the company such as Contract Killer, while 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 succeeding Niccolo de Masi. The motivation for the change was apparent – the sector is booming yet sales grew from $223.1 million in 2014 to just $249.9 million in 2015, then dropped to $200.6 million in 2016.

Thomas’ new direction was to jettison the celebrity branded games which sucked royalty revenue from the firm (Taylor Swift being the lone survivor), and re-focus the team on developing new games. Games made with such celebrity names as Katy Perry, Britney Spears, and Nicki Minaj all, essentially, failed. So Thomas is betting on the creativity of Glu Mobile, Inc. (NASDAQ:GLUU) employees to return the company’s stock to its upwards trajectory. To help achieve this Thomas brought in a big hitter – Mike Olsen. Olsen had been running the Electronic Arts team that developed Star Wars : Galaxy of Heroes – EA’s #1 grossing game.

However, competition in the $40 billion mobile gaming space is fierce. And developing games that attract a wide number of users can cost a lot of money – creative talent has often been the black hole through which funds disappear, never to return.

However Glu Mobile, Inc. (NASDAQ:GLUU) released its Q4 2016 and full year earnings results to relieved investors. Q4 revenues of $46.3 million exceeded street expectations. That said, 2016 revenues were $200.6 million in contract to 2015’s figure of $249.9 million. Unfortunately, gross margins also decreased from 57% in 2015 to 40% in 2016. All of that led to a net loss of -$87.4 million which translated into a GLUU EPS loss of -$0.66 – far worse than 2015 when the EPS loss was just $0.06.

Analysts are still keen on Glu Mobile, Inc. (NASDAQ:GLUU). Of the four firms that follow the firm, three assign GLUU a rating of “Strong Buy” while the lone outlier has GLUU shares rated at a “Buy”. Their consensus price target is $3.

3/27/2017
Ticker Symbol GLUU
Last Price a/o 12:42 PM EST  $                      2.20
Average Volume                4,310,000
Market Cap (mlns)  $                  285.59
Sales (mlns) $200.60
Shares Outstanding (mlns) 134.08
Share Float (mlns) 104.59
Shortable Yes
Optionable Yes
Inside Ownership 1.00%
Short Float 12.69%
Short Interest Ratio 3.08
Quarterly Return -0.47%
YTD Return 9.79%
Year Return -27.30%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.