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

Glu Mobile Inc.'s Solid Q4 Results
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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 stocks have now gone solidly higher. One of the three companies, Glu Mobile Inc. (NASDAQ:GLUU) recently climbed above the penny-stock ceiling of $10.00 and broke through a tested resistance level.

At levels not seen since October 2008, GLUU stock continues to have excellent momentum. Despite being up 35% so far in 2019, Glu Mobile continues to have room to run. It is definitely a 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 in which players can pay to enhance or speed up their gaming experience.

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Although many players don’t pay anything, 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.

GLUU Stock Information
Market Cap $1.5 billion
Beta 0.09
52-Week Change 176%
52-Week High $10.89
52-Week Low $3.58
Shares Outstanding 144.1 million
Float 113.7 million
50-Day Moving Average $9.34
200-Day Moving Average $7.99

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

Glu Mobile stock has had great upward movement in the last two years. In 2017, its share price increased 89.5%. In 2018, it went up 120%. In the first quarter of 2019, the price grew 35%, for a cumulative gain of 456%.

In early February, GLUU stock hit a resistance level of $10.40. In mid-March, the stock broached that level. On March 19, it 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; only 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. Full-year revenue was $366.6 million, a 28% increase over the $286.8 million recorded for 2017. (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). That’s up from the fourth quarter of 2017, when Glu Mobile reported a net loss of $39.6 million ($0.29 per share).

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).

Glu Mobile Inc. ended the last 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 2018 bookings reached a record $384.6 million, up 20% year over year.

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

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.)

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.