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Glu Mobile: Undervalued Pandemic-Resistant Play

May 07, 2020 10:28 AM ETGlu Mobile Inc. (GLUU) Stock8 Comments
Mikro Investments profile picture
Mikro Investments


Glu Mobile (NASDAQ:GLUU) is set to announce results for Q1'20 on 7th May. We expect Glu Mobile to beat the expectations on revenue as well as earnings. Also, it is highly likely that they will raise the bookings guidance for the year. The video gaming sector is one of the very few bright spots in the stock market battered by the effect of the COVID-19 pandemic. Within the video gaming sector, Glu Mobile is one of the most undervalued companies. So, strong positive results along with improved guidance from Glu Mobile should result in a strong uptrend in its stock price even in this gloomy stock market conditions.

Positive Momentum Driven by Underlying Strength

Glu Mobile stock has been on a roller coaster ride for the past year. It hit a high of around $11.5 in early April last year only to fall by more than 60%, first due to user acquisition pressure in Q1'19 followed by a delay in their new game DSA. Since then, Glu Mobile management seems to have steadied the ship with the following notable trends:

  • Existing games are performing exceedingly well with live operations including new feature updates, weekly and daily competitions
  • Constant monitoring and opportunistic adjustment of user acquisition spending.
  • Smooth game approval and gating process culminating in the recent release of Disney Sorcerer's Arena (DSA).
  • Strong and healthy new game beta pipeline after long delays and postponements.

These positive trends culminated in the recent blow out results for Q4'19. The strong earnings report resulted in a greater than 25% surge in the stock price the day after the earnings announcement.

Well Run Live Ops with Sophisticated UA Spending

Glu Mobile is continuing to add more features and improve the performance of the existing growth games. Despite the increased competition, Glu Mobile is able to

This article was written by

Mikro Investments profile picture
About 25 years of investment experience, primarily in small and micro-cap stocks.

Analyst’s Disclosure: I am/we are long GLUU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (8)

this stock is really just a pump and dump stock... the history of this stock is horrific. I would advise to take the profit and get out right away.
Mikro Investments profile picture
GLUU has been a volatile stock. However, recently the fundamentals are getting so strong that there is no other go for the stock but to catch up. Even with the bump up in stock price today, the EV to forward revenue ratio likely remains the same since the revenue guidance went up by more than 15%
Mikro Investments profile picture
Most surprising is the performance of TSB2020. Though the rankings seem to be off in April compared to 2019, bookings revenue this April seems to have outperformed 2019 April by more than 22%!
In my opinion that was the biggest highlight of the call. It put my one concern with the company to rest.
Mikro Investments profile picture
@Vince1122 @Federico Cuneo I couldn't agree more. The Q1'20 results and the CC confirms it.
Your article was directly in line with how the conference call played out!
Federico Cuneo profile picture
Thanks for the article!! I like the company and this could be a transformation year for it. I am long Gluu
Great article! I think this is a very transformational year for gluu. Last year the rise in share price was build on speculation, but this year it is built on execution.
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