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Glu Mobile: All Systems Go But The Chart

Jun. 05, 2020 10:34 PM ETGlu Mobile Inc. (GLUU)18 Comments


  • Glu Mobile boosted 2020 guidance to $507.5 million.
  • The company raised $138 million via a secondary offering at $9.25 per share.
  • The mobile game developer has a strong history of using cash to purchase gaming assets on the cheap.
  • The stock is a bargain at an EV/S multiple of 2.3x.
  • This idea was discussed in more depth with members of my private investing community, DIY Value Investing. Get started today »

While Glu Mobile (NASDAQ:GLUU) is still struggling at a breakout above $10, the company has made a couple of significant announcements hinting at a bright future ahead. The mobile game developer raised the guidance for Q2 while also raising funds for a potential acquisition. My investment thesis is bullish on the stock, but the chart suggests a struggle pushing through resistance here as the market rolls out of the stock benefiting from stay-at-home orders.

Bookings Boost

Back on May 29, Glu Mobile boosted Q2 bookings by $12.5 million to $165.0 million at the midpoint. The mobile game developer now projects 2020 bookings of $507.5 million. The company now expects a substantial x% boost to bookings from the $423.3 million produced in 2019, but the guidance includes no additional bookings boost beyond June.

The stock didn't get a huge boost due to a general benefit assigned to the Q2 stay-at-home boost. The fear in the market is that gamers are about to head outside for activities restricted over the last couple of months.

The fears have some merit, considering the market doesn't like peak sales metrics. Glu Mobile is predicting bookings deceleration exiting the year with the following bookings trends:

  • Q1'20A: $106.5 million, up 15%
  • Q2'20E: $165.0 million, up 62%
  • 2H'20E: $236.0 million, up 3%

The 2H guidance assumed in the metrics provided by Glu Mobile has substantial upside potential. First, the company has previously guided to an additional $10 million bookings boost from Tap Sports Baseball 2020 with MLB coming back this year. Right now, the sports league is the only one without a plan to return to play this year. Second, the guidance doesn't include any estimates for new games: Originals and Deer Hunter World.

Glu Mobile could easily end up with 10+% bookings growth in the 2H of

ChartData by YCharts

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Stone Fox Capital Advisors, LLC is a registered investment advisor founded in 2010. Mark Holder graduated from the University of Tulsa with a double major in accounting & finance. Mark has his Series 65 and is also a CPA.

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Analyst’s Disclosure: I am/we are long GLUU, ZNGA. 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.

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