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Glu Mobile Game to Feature Taylor Swift: Will it Drive Growth?

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Glu Mobile, Inc.GLUU shares soared more than 32% in yesterday's trading session after the company announced an exclusive multiyear partnership with Taylor Swift for its next celebrity game.

The game is expected to be out in the latter half of this year, but the details have been kept under wraps. Nonetheless, the company did offer some hints as to how Swift will feature in the game saying "We realize that Taylor and her global fan base expect a new and highly differentiated mobile gaming experience. Glu is equally committed to designing never before seen gameplay elements that utilize Taylor's unique creativity. Accordingly, we will spend the required development time to ensure this innovation is achieved."

According to Gluu Mobile, Swift has a fan following of over 227 million on social media. As of Feb 2, the celebrity had 74 million followers on Facebook FB , 70.4 million on Twitter TWTR , 64.8 million on Instagram and another 18 million on Vevo. However, some overlapping is likely.

Glu Mobile has in the past collaborated with a number of celebrities for developing games based on them. The company is still best known for its Kim Kardashian: Hollywood , a freemium game that was released in 2014. The game enables players to live the life of an A-list celebrity and make in-house purchases to upgrade their characters. In the recently reported fourth quarter 2015 results, the company derived nearly 24% of its total revenue from this one game itself. In Dec 2015, the company also launched Kardashian-branded apps like Kimoji, which has already gained a lot of popularity.

However, the question is whether the company would be able to deliver strong growth banking on Swift's popularity and international presence. This is because not all its celebrity games have done well in the past. For instance, its Katy Perry Pop game has delivered a muted performance, despite Perry having a broader reach than Kardashian. In fact, because of the weakness of this game, the company had to slash its 2016 guidance in the recently reported fourth quarter earnings.

Glu Mobile reported better-than-expected results in the fourth quarter of 2015. Its loss per share was lower than estimated and revenues came ahead of expectations. The company has a decent pipeline to drive growth in 2016 including celebrity games like Kendall and Kylie Jenner, Britney Spears, Gordon Ramsay and Nicki Minaj.Additionally, other upcoming games like Tap Sports Baseball 2016 and Frontline Commando Rivals are also expected to give significant boost to results this year.

However, the company still faces stiff competition from established players like Electronic Arts Inc. EA and Activision Blizzard. Further, significant investment in research and development of new games will likely be a headwind for the company, putting pressure on margins. This is especially a concern as the company is yet to make profit.

Currently, Glu Mobile has a Zacks Rank #5 (Strong Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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