Published October 9th, 2012:
Long Glu Mobile
Mobile gaming company Glu Mobile is currently trading down some 18%. That is AFTER the share declined some 10% during last week’s trading.
The weak share price performance seems once again triggered by disappointing comments from Zynga, similar to what happened ahead of Q2 2012. Zynga’s CEO Mark Pincus said last Thursday: “We are lowering our outlook to reflect delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something.”
While both Zynga and Glu Mobile are making games, there is a huge difference: Zynga has more than 90% of its revenues coming from Facebook while Glu Mobile is 100% exposed to mobile gaming, i.e. smartphones and tablets. Also: Glu Mobile’s games are actually good...
We see this as a great entry opportunity into Glu Mobile and its great exposure towards mobile gaming. Remember, Glu Mobile is together with our top-pick G5 Entertainment, the only publicly traded 100% play on the mobile gaming market. Both companies develop and publish apps for smartphones and tablets and enjoy stellar growth.
Looking at the recent download statistics for Glu Mobile games among the top grossing charts around the world (see ranking check below), we note that Glu has lost some traction in recent weeks, however, still holding very good positions. It is also important to note, that the underlying market is constantly growing, so the lower rankings today do not necessarily mean lower revenues than e.g. 3 months ago. Glu Mobile’s gaming line-up into the all important holiday season looks impressive and we think at USD 3.30, the stock is very attractive.
We also remind you that only a few weeks ago Glu Mobile’s CEO Niccolo de Masi was very bullish on how the iPhone 5 will affect his business in the important fourth quarter of the year. Said de Masi: “In Q4 2011, we came in 10 to 15% ahead of guidance because of the iPhone 4S release” and he added that he expects the iPhone 5 to have at least the same impact in Q4 this year and Q1 2013.
Number of Glu Mobile games among the top grossing charts for iOS:
(We are screening the app markets of Australia, Canada, China, France, Germany, Italy, Japan, Netherlands, Russia, South Korea, Spain, Sweden, UK and USA).
PS: Want to be among the first to receive our trading ideas, ranking checks, CEO interviews and much more? Subscribe to our newsletter or follow us on Twitter!