Image source: Glu Mobile.
Continue Reading Below
One of this month's hottest stocks isGlu Mobile . Shares of the casual-gaming app developer have soared 76% this month -- up 23% last week alone -- after encouraging initial results of its new celebrity-themed game.
Glu Mobile soared last week after releasing Kendall & Kylie on Thursday. The game -- featuring reality show stars Kendall and Kylie Jenner -- shot to the top of the iOS App Store charts. It's been the top download among free apps since Thursday, and it was there as of Saturday night. It was in the No. 10 spot on the official Android app marketplace.
The game falls in the "freemium" category that blends free and premium. The app itself is a free download, but digital goodies can be purchased to enhance the gaming experience. It's a territory that Glu Mobile seemed to be mining well when it put out Kim Kardashian: Hollywood two summers ago. It was a big hit, making it easier for Glu Mobile to ink exclusive smartphone gaming deals with other reality show stars and musical icons.
The first big celebrity-themed game to follow Kardashian's 2014 smash was Katy Perry Pop, but the game's rollout two months ago bombed. The pop star's disappointing release eventually led to Glu Mobile hosing down its guidance for 2016, but the stock still started to rally earlier this month after announcing a deal with Taylor Swift for a new game that is slated to be released in late December.
Glu Mobile's clearly on a tear this month, pushing higher long before Kim Kardashian's half sisters were featured in a new app. The stock has moved higher in seven of the past eight trading days.
Continue Reading Below
It's still too soon to say if Kendall & Kylie will be as popular as Kim Kardashian: Hollywood. That game generated $150 million in revenue in its first year, a big deal for a company commanding a market cap of just a little more than $500 million.
There are plenty of other potential superstars in its arsenal. Glu Mobile has gone on to ink deals with Britney Spears, Nicki Minaj, and even celebrity chef Gordon Ramsay. The fear here will always be that mobile gamers are fickle. They tend to move on from games fairly quickly, likely because the switching costs are low given the relentless deluge of new free or nearly free diversions. Mobile gaming has leveled the playing field, but that also creates a glut of titles competing for short-lived attention.
Glu Mobile's success as an investment will require a steady diet of decent-sized hits. The market may celebrate a near-term success, but since most franchises have proven to have limited shelf lives, the key is to keep the fresh apps coming. Glu Mobile seems to be back on track now, but it will need something new to keep the stock on top in a few weeks or months.
The article Can Glu Mobile Keep Going After Last Week's 23% Pop? originally appeared on Fool.com.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.