Can Glu Mobile Stock Bounce Back After Last Week's 12% Drop?
Shares ofGlu Mobile(NASDAQ: GLUU)tumbled 12.4% last week, taking a big hit after posting quarterly results that fell short of market expectations. Glu Mobile stock initially moved higher after a Roth Capital analyst upgrade, but that was quickly tossed by the wayside after Glu announced its fourth-quarter report.
Revenue clocked in at $46.3 million for the quarter, well below the $61 million it posted a year earlier and just shy of the $46.9 million that analysts were forecasting. The results are kinder if we focus on the mobile gaming publisher's bookings, where the $57.8 million in total bookings for the period were essentially flat with the prior year's showing.
Glu Mobile's gross margin contracted and its net loss widened during the quarter. It posted a net loss of $0.13 a share, nearly twice as large a deficit as Wall Street pros were targeting. Glu Mobile has now posted five consecutive quarters of red ink. In short, it was a bad report and Glu Mobile's guidance didn't offer a lot of hope that things would get better anytime soon.
Image source: Glu Mobile.
Keeping down with the Kardashians
Glu Mobile is eyeing $53 million to $55 million in bookings for the current quarter, a sequential dip from the $57.8 million it just scored during the holiday quarter. Glu Mobile's outlook for $215 million to $225 million in bookings for all of 2017 suggests that the year's final three quarters will be in line with the current period, but that's not the kind of visibility that investors can rely on. Mobile gamers are fickle, and this is a hit-driven business.
Growth has been a challenge for Glu Mobile lately. This is the sixth quarter in a row of year-over-year declines in revenue, and the fifth straight period where it's been a double-digit percentage decrease. You also have to go all the way back to the second quarter of 2014 -- just as Glu Mobile was about to launch Kim Kardashian: Hollywood-- to find the last time it checked in with quarterly revenue as low as it did last week.
One person left smarting over the poorly received report isRoth Capital analystDarren Aftahi. He upgraded the stock earlier in the week, betting on proprietary analysis that was suggesting strong bookings for the period. Glu Mobile's total bookings weren't bad, but clearly the market disagreed with where the stock should go after Wednesday's report.
The silver lining for those still long the trashed stock is that Glu Mobile keeps releasing new titles at a heady clip. You never know when it will score the next Kim Kardashian: Hollywood, and that game's success has helped it ink deals with other mega celebrities with wide social media followings. Glu Mobile also has more than $100 million in cash and no debt on its balance sheet, giving it the ability to be patient as it waits for that hit that will turn so many unfortunate streaks of deficits and declining growth around.
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