Glu Mobile Inc.: Solid Q4 Results & Investor Optimism Lift Gaming Tech Firm Out of Penny-Stock Territory

Glu Mobile Inc. Up 35% in 2019, Breaks Through Resistance Level

At the end of 2018, we published an article on three tech stocks poised to break out of penny stock territory and trend steadily higher in 2019.

It’s only the third month of 2019, but all three have now gone solidly higher. The last of the three, Glu Mobile Inc. (NASDAQ:GLUU) recently climbed above the $10.00-penny-stock ceiling and also broke through a tested resistance level.

Glu Mobile continues to have excellent momentum and GLUU stock is at levels not seen since October 2008. Despite being up 35% so far in 2019, Glu Mobile continues to have room to run. It is definitely one tech stock worth keeping on your radar in 2019 and 2020.

Glu Mobile Inc. Overview

Glu Mobile is a leading developer of “freemium” mobile games. These are popular free-to-play games where players pay to enhance or speed up their gaming experience.

Many don’t pay anything, but a lot of people are happy to part with their money to buy accessories or refill their energy. Case in point: in 2018, the gaming industry grew by 13%, with free-to-play titles capturing 80% of the revenue. (Source: “2018 Digital Games & Interactive Entertainment Industry Year In Review,” SuperData Research Holdings, Inc., last accessed March 21, 2019.)

Glu Mobile’s diverse portfolio of award-winning titles include Kim Kardashian Hollywood, Cooking Dash, Covet Fashion, Deer Hunter, Design Home, MLB Tap Sports Baseball 2018, and Restaurant Dash with Gordon Ramsay.

(Source: “Glu Mobile Inc. (GLUU),” Yahoo! Finance, last accessed March 21, 2019.)

Glu Mobile stock has had great momentum over the last two years. In 2017, its share price increased 89.5%. In 2018, it was up 120%. In the first quarter of 2019, the price has grown 35% for a cumulative gain of 456%.

In early February, GLUU stock hit a resistance level of $10.40. In mid-March, it broached that level. On March 19, the stock closed at $10.58. And it continues to move higher.

Why the sudden burst over the last week? There were no big announcements, just investors looking at the company’s fundamentals and growth prospects.

There aren’t a lot of investors betting against Glu Mobile Inc. right now, either; just 3.97% of its float has been shorted.

Chart courtesy of StockCharts.com

Glu Mobile Inc. 2018 Revenue Up 28%, 2019 Guidance Raised

On February 4, Glu Mobile announced the financial results for its fourth quarter and full year ended December 31, 2018.

Fourth-quarter revenue came in at $95.6 million, a 19% increase over the $80.2 million recorded in the same prior-year period. (Source: “Glu Reports Fourth Quarter and Full Year 2018 Results,” Glu Mobile Inc., February 4, 2019.)

The company reported a fourth-quarter net loss of $1.3 million ($0.01 per share). During the fourth quarter of 2017, Glu Mobile reported a net loss of $39.6 million ($0.29 per share).

Glu Mobile Inc. ended the quarter with cash and cash equivalents of $97.8 million. At the end of 2017, the company had cash and cash equivalents of $63.8 million. It remains debt free.

Full-year revenue was $366.6 million, a 28% increase over the $286.8 million recorded in 2017. The company reported a full-year net loss of $13.2 million ($0.09 per share), a marked improvement over the fourth-quarter 2017 net loss of $97.6 million ($0.72 per share).

Full-year 2018 bookings reached a record $384.6 million, up 20% year over year.

CEO Nick Earl commented:

We enter 2019 with a profitable and expanding core business and a strong pipeline of original IP games that we plan to launch this year and beyond. We believe we are well positioned to build on the strong momentum from 2018 into this year and beyond.

(Source: Ibid.)

To that end, Glu Mobile provided the following outlook for the first quarter of 2019 and full-year guidance.

For the first quarter, Glu expects bookings to be in a range of $88.0 million to $90.0 million. It also raised 2019 full-year bookings guidance to a range of $435.0 million to $445.0 million.

Analyst Take

A lot of tech stocks took a beating during the October 2018 sell-off and December swoon. For the most part, Glu Mobile stock brushed the market volatility aside and rebounded quickly.

Glu Mobile Inc. is a fundamentally strong company with a solid portfolio of award-winning games, a number of new titles in development, and tremendous long-term growth potential. The free-to-play gaming industry is hot and Glu Mobile will likely continue to capitalize on this booming market.