Mobile game developer Glu Mobile‘s share price has been soaring in recent trading sessions despite the generally muted market. Several sources are citing rumours that Glu Mobile has received a takeover bid of $7 per share from Microsof. The same rumor has already surfaced on June 14.
A spokesperson for Microsoft declined comment on the renewed chatter. A Glu Mobile spokesperson was not available.
At USD 7 per share, Glu Mobile would trade at a PE-ratio of 44x expected 2013 earnings. As a reminder, our top-pick G5 Entertainment currently trades at a PE-ratio of 12x expected 2012! earnings. Unlike Glu Mobile, G5 is already profitable and is growing faster and has a net cash position. Applying a PE-ratio of 44x on G5’s expected 2012 EPS of SEK 3,2 implies a share price of SEK 140 (the share is currently trading below SEK 39). That does not take into consideration that G5 is expected to grow by some 80-100% also in 2013 and 2014, which makes EPS in the region of SEK 5.5 – 6 realistic for 2013. 44 times 5.5 equals 242.
Another data point that highlights the huge share price potential we see in G5 Entertainment.