Why China Mobile Games Shares Popped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of China Mobile Games & Entertainment Grp Ltd (NASDAQ: CMGE  ) jumped nearly 12% Friday after the company released better-than-expected first-quarter results.

So what: Quarterly revenue increased 488% year-over-year to $34.5 million, which helped China Mobile Games swing from a $2.1 million adjusted net loss this time last year to adjusted net income of $6.2 million, or $0.21 per diluted American depositary share. Analysts, on average, were looking for net income of $0.11 per share on sales of $30.23 million. 

Now what: China Mobile Games' average revenue per user also continued to improve, this time to $6.38 in the first quarter. By comparison, China Mobile Games achieved revenue of $3.82 per user in the same year-ago period, and $5.87 per user when it missed top-line estimates last quarter. In any case, today's beat is solid by any measure. If China Mobile Games can continue making strides in achieving profitable growth, I see no reason the stock won't continue to reward investors from here.

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