Why Glu Mobile Inc. Stock Popped Today

What happened

Shares of Glu Mobile Inc. (NASDAQ: GLUU) were up 11.2% as of 3:15 p.m. EST Monday after a positive analyst note.

More specifically, Roth Capital analyst Darren Aftahi maintained his "buy" rating on the free-to-play games specialist, but also increased his per-share price target to $5.25 from $4.75. Glu Mobile stock is trading at roughly $4.63 per share as of this writing.

So what

Keeping in mind Roth Capital hosted a meeting with Glu Mobile management last week, Aftahi voiced his belief that both augmented reality trends and localization could mean higher-than-expected bookings next year relative to Wall Street's expectations.

To be fair, these catalysts shouldn't be entirely surprising as management listed both as areas of focus during the company's quarterly conference call last month. According to CEO Nick Earl at the time, Glu Mobile plans to introduce augmented reality features within its Design Home app -- the parent company of which it acquired just over a year ago -- to "create a more in-depth and interactive experience."

In addition, Earl outlined plans to create localized versions of existing games for new geographies to expand their respective addressable markets. He promised more details as Glu Mobile finalized its growth plans for 2018.

Now what

With shares up nearly 140% so far in 2017, most recently helped by a wave of enthusiasm surrounding a new social app featuring Taylor Swift, Glu Mobile certainly has momentum on its side for the time being.  But if Glu Mobile shows any signs of faltering as it implements its growth strategy, I fear shares will fall hard and fast in response. And I think investors would do well to exercise caution in the coming quarters.

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Steve Symington 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.