Why Glu Mobile Stock Jumped Today

What happened

Shares of Glu Mobile (NASDAQ: GLUU) have jumped today, up by 10% as of 2:40 p.m. EDT, after the mobile-game maker received an upgrade when Roth Capital boosted its rating to buy.

So what

Roth Capital analyst Darren Aftahi upgraded his rating on Glu while assigning a price target of $7 for the stock. Shares had been completely demolished in early August after Glu reported second-quarter results and drastically cut its full-year 2019 bookings outlook in part to "reflect the timing of new launches." Aftahi believes that sell-off was overdone and that the stock has been "overly penalized."

People playing games on phones

Image source: Getty Images.

Shares now represent a compelling risk-reward trade-off and "look attractive relative to second-half 2019 and 2020 estimates, with new games likely to help substantiate out-year growth," the analyst wrote in a research note to investors.

Now what

Glu, which has historically licensed intellectual property for games, has been working to grow its royalty-free titles. Royalty-free games represented 64% of bookings in the second quarter. The company also said it was adjusting its guidance methodology for new games, choosing not to include bookings in its forecasts until a title launches globally. "We feel this is a prudent approach to reduce guidance volatility and increase our forecast precision," said CFO Eric Ludwig.

Glu's bookings in the third quarter are trending to an estimated $117 million, according to Roth's proprietary tracking model, which would top Glu's outlook of $110 million to $112 million in bookings for the quarter. A little further out, Glu is currently forecasting fourth-quarter bookings to be $101.5 million to $103.5 million.

10 stocks we like better than Glu Mobile
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Glu Mobile wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of June 1, 2019


Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

In This Story


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More