Glu Mobile Inc. (GLUU) stock soared to over 11-year high to reach $11.46 on Tuesday. Investors were cautious after the mobile game publisher reported disappointing results for the fourth quarter but believed the stock to be a good investment. This was based on the future of mobile games and the pace at which the industry is improving.
Majority of the analysts recommended a “strong buy” or “buy” rating with an average price target of $10.54. With the stock reaching the second peak, traders expect the sell-side analysts to revise their price target in the coming days. The analysts tend to value the company much more than the current scenario.
They believed that Glu Mobile developing the next generation Deer Hunter franchise could provide a huge potential in the next year as the mobile shooter game is currently slated to be released in beta in late 2019. The game looks to build upon the success of previous Deer Hunter titles which have generated more than a quarter billion downloads since Glu acquired the IP in 2012.
According to market researcher Newzoo, the global gaming market is set to exceed $180 billion in revenues in 2021, up by 30.6% from $137.9 billion in 2018. This was due to an increase in the number of people playing games as Newzoo estimates that to be about 2.3 billion. The mobile games, which could contribute more than half of the game revenues, are anticipated to grow from $70.3 billion this year to $106.4 billion by 2021.
Over the past year, the company’s new games roadmap has worsened due to the delay or cancel of multiple titles. Traders remained concerned about the current scenario but could turn positive if the future game’s roadmap becomes more clear and the beta lineup started increasing.
For the fourth quarter, Glu Mobile reported a narrower loss as a strong performance from Growth Games drove bookings higher by 18%. Revenue increased by 19% year-over-year. The results were benefited by the successful execution of its live operations strategy through enhanced gaming experience, improved merchandising and strategic advertising placement.
The company had expected bookings in the range of $88 million to $90 million for the first quarter of 2019 and in the range of $435 million to $445 million for the year 2019. The company has three new launches that are all in various stages of development with a plan to go live in the May to August 2019 timeframe. The company has three additional games in various stages of development for the 2020 timeframe.
Shares of Glu Mobile opened higher on Tuesday and is trading in the green territory. The stock has risen over 207% in the past year and over 60% in the past three months.