Glu Mobile Inc. (NASDAQ:GLUU) exploded upwards by 25% on the back of a spectacular result and the announcement of the Chinese investment company Tencent investing in the company, buying up 14.6% stake. The volume surged to 40 million against a paltry daily average of 5 million only.
Glu Mobile Inc. (NASDAQ:GLUU) banked on the wildly popular mobile game ‘Kim Kardashian: Hollywood’, along with other popular games like Racing Rivals and Deer Hunter 2014 to report a revenue of $62.44 million for the first quarter, not only $11 more than the street expectations but an increase of 33% over a y-o-y basis. The analysts were expecting a loss of $0.01 but the non GAAP EPS came at $0.02, though the decline from the $0.06 in the first quarter of 2014. The EPS comes down to $0.01 on a GAAP basis, marginal improvement compared to the break-even first quarter last year.
The market was excited about the Chinese company Tencent too, operator of the popular WeChat mobile messaging system, which is buying the 14.6% stake for $126 million. This deal is expected to increase the influence and penetration of GLUU in the Chinese mobile gaming market. On the other hand, the company is trying to duplicate the success of celebrity games by developing games based on Katy Perry and Britney Spears and they will hope these to be as successful as the game on Kim Kardashian.
Technically, the stock has taken the form of a Rounded bottom in the last 1 year. The bears were losing momentum in the latter part of 2014 and the year of 2015 has already seen almost all the losses recovered, with the current price only 11% away from the 52 week high. The external projection gives us a target of $7.50, which is almost coincident with the 2014 high of $7.60.