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Glu Mobile (NASDAQ:GLUU) is one of my most aggressive positions in my portfolio, and one of the few that is not generating positive earnings yet. As I articulated in late February, it has a solid high risk/high reward profile. It is up more than 15% since I took a stake in the company. The company released earnings Thursday. It was a solid report and should provide positive catalysts to the stock going forward. I continue to believe the best days for GLUU are ahead of it, and I would not be surprised with all the activity going on in the social media space like Zynga's (NASDAQ:ZNGA) recent purchase of OMGPOP; that the company gets acquired by the end of the year.

Key Earnings Highlights for GLUU:

  • EPS of a 1 cent loss beat consensus estimates by 7 cents a share.
  • Revenues came in at over $21mm and beat estimates by $3mm.
  • Smartphone revenue experienced 158% growth from the same period last year and a 17% growth quarter-on-quarter.
  • Announced that they were adding three titles to this year's launch schedule. They expect to launch 23 new titles throughout 2012 now.

4 additional reasons GLUU has significant upside from under $5 a share:

  • Based on latest earnings report, the company looks set to breakeven faster than previously anticipated. It has net cash of over $30mm which should easily get it to the point where it is generating earnings.
  • The stock has been initiated as a "Buy" by Cannacord Genuity and upgraded by Needham since the original story ran on GLUU.
  • In addition, the 7 analysts that cover the stock have a median price target of $7 a share on GLUU. Based on latest earnings report, I would look for some of these targets to be taken up in the coming weeks.
  • Smartphone sales now represent 81% of total revenues and the company should nicely ride the accelerating migration to this platform.

Disclosure: I am long GLUU.

Source: Social Gaming Concern's Latest Earnings Report Should Impress Potential Acquirers