Is the Kardashian Game Success a Blessing or Curse for Glu Mobile?

Should long-term investors like the sudden success of Glu Mobile's Kim Kardashian Hollywood game?

Jul 17, 2014 at 10:30AM

Glu Mobile's (NASDAQ:GLUU) stock has soared nearly 50% in the last three weeks behind the success of its Kim Kardashian: Hollywood game. In the past we've seen the excitement and fear that single games can bring for a company with the likes of King Digital (NYSE:KING) and Zynga Inc (NASDAQ:ZNGA). Albeit, with Glu Mobile's titles on the rise, is it time to get long now?

A warm welcome
In the last couple weeks Needham, Cowen, Benchmark, and Bloomberg are just a few of the firms to give the small cap Glu Mobile their blessing following a bullish reception to Kim Kardashian: Hollywood. The game launched last month and already is ranked number 2 on App Annie's list of top free and grossing U.S. iPhone applications.

In the same categories the game is also holding a top 25 ranking in the Google Play store, and users on both operating systems have given the title a favorable review. As a result, some analysts now believe the game could generate over $200 million in annual revenue, which isn't bad for a company that's only created $125 million during the last 12 months.

The need for diversification
With that said, investors are naturally skeptical of investing long-term following the success of single-games. Most notably, Zynga's success with the FarmVille franchise landed it an $11 billion market capitalization just shortly following its IPO in 2012. However, FarmVille's usage has since fallen fast, and Zynga has been unable to replicate its success with other titles. As a result, shares of Zynga have fallen drastically, now worth just $3 billion.

As with FarmVille and other popular titles like Candy Crush from King, the goal is diversification for these game developers. Some times a company is unsuccessful like Zynga, or successful like King Digital right now.

Last year, Candy Crush accounted for nearly 80% of the $2 billion in revenue that King Digital created. The sudden success of Candy Crush sent the company's revenue soaring 11-fold versus the year prior. And while King looked almost destined for a repeat of the Zynga madness, it found success with other games.

Specifically, Candy Crush now accounts for only 67% of its total gross bookings, meaning the company has become more diversified, and as a result its stock has soared 20% in the last month alone.

Is Kim Kardashian good or bad for Glu?
With all things considered, the success of King and the ultimate goal of diversification might actually weigh in Glu Mobile's favor. Unlike King and Zynga's sudden success with blockbuster games, Glu Mobile was already well-established with other titles. Furthermore, its market capitalization of only $550 million is a reflection of far lower expectations than its respective peers.

Not to mention, Glu Mobile saw its revenue soar 90% during its last quarter to $47 million behind the success of Deer Hunter 2014 and Eternity Warriors 3. Hence, the Kardashian game was an added bonus, not a title whose success is tied to the success of the company.

Albeit, Glu Mobile is expected to generate revenue of $161 million this year, growth of 42% that is very much tied to the success of its total portfolio. Therefore, even if Kim Kardashian: Hollywood does create revenue of $200 million, minus a 30% royalty, the company will likely have no more than 50% of total revenue tied to the one game, which will undoubtedly will be appreciated on Wall Street.

Foolish Thoughts
Given what we've seen with Zynga's inability to replicate FarmVille and the initial skepticism that surrounded King, having a P/E ratio of just 10.0, Glu Mobile's diversification is a blessing in disguise for shareholders. Overall, the Kardashian game's success further validates the uptrend in shares of Glu Mobile, and with sales expected to rise, and the initial opinions being bullish among gamers, Glu Mobile might very well have much higher days ahead long-term.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Brian Nichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers