Glu Mobile (GLUU, Financial) has a very volatile year. The stock reached an all-time high of $7.6 and then fell steeply to under $4. Investors bid up the stock in anticipation of sustained revenue and its upcoming games; however, the waning popularity of several games and the underperformance of the Kim Kardashian game contributed widely to Glu’s downfall. The stock is now trading at just off $4 and given the trends in the mobile gaming industry, I think Glu Mobile is a stock worth considering.
Glu Mobile is a small company (when compared to other mobile gaming companies) but has a very efficient workforce that has pumped out various hit games over the last few years. As per the company's latest earnings report, its latest hit, Deer Hunter 2014, is still in the top 100 grossing apps in the U.S. App store for iPhone, more than 12 months after its worldwide launch. Not long ago, the Kim Kardashian game was an enormous hit and the company agreed to terms of its permitting concurrence with Kim for an extra three years. In August, Glu Mobile completed the acquisition of Cie Games, developers of Racing Rivals and Car Town. Because of a couple of acquisitions in the recent past, and a few hit games, revenues grew significantly 2014 and should continue to grow in 2015.
Outside of what happens with the games that Glu Mobile creates, the common pattern for cell phones and tablets is exceptionally solid. Consistently, more mobile gadgets are added to the environment. Mobile telephones are consistently constructed with bigger screens and purchasers are including tablets that both build the capacity to play the activity-based games of Glu Mobile.
Tablets and particularly the iPad are principally used to play games. One can likely imagine that alongside more mobile gadgets, the movement to bigger screens exponentially prompts higher time used on games playing further bolstering the good fortune of mobile game developers.
Glu Mobile is a greater company regarding its aggregate addressable market ("TAM") prospects. The company's image now has better identity in the market place. It confronted a negative net revenue in each of the most recent five years finished 2013. In 2010, revenue from cell phones was $12 million. In 2014, the midpoint revenue could be $228 million.
By supporting upside and minimizing drawback with its suite of titles, Glu Mobile could support profitability in the years ahead. Last quarter, Gluu had five games that were the main 100 grossing iOS applications in the United States.
Conclusion
Although it is very difficult to consistently come up with new games in the mobile gaming market, Glu Mobile has managed to do so successfully till now. Looking at the company’s mobile gaming pipeline, I’m sure that the company will continue to rise in the long-run, thus making it a good buy for investors. Moreover, the trends in the mobile gaming industry paint a good picture for Glu Mobile and the fact that its rivals like Zynga (ZNGA, Financial) and King Digital Entertainment (KING, Financial) have also struggled in the recent past, Glu may be well positioned to benefit the most from this trend.
