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Glu Mobile Stock Has a Lot to Prove on Wednesday

By Rick Munarriz - Oct 30, 2017 at 2:28PM

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The mobile gaming company has seen its stock more than double in 2017 despite a setback last week. It reports third-quarter results this week.

One of last week's biggest losers was Glu Mobile (GLUU), as shares of the mobile games publisher suffered a 14% decline. There wasn't any material news triggering the sell-off, and all it ultimately did was slightly dent one of this year's biggest winners. Shares of Glu Mobile have still more than doubled in 2017.

Glu Mobile investors won't have to wait long for a chance to bounce back. The company behind Design Home, Kim Kardashian: Hollywood, and Deer Hunter will report fresh financials Wednesday afternoon. The stock has a tendency to make a big move on earnings, soaring 12% the week it posted its second-quarter results. The surge followed an 8% pop the week it announced its first-quarter numbers, though it did slide 12% the quarterly report before that.

Title screen of Kim Kardashian Hollywood game.

Image source: Glu Mobile.

Sticking it

Expectations are running high for Glu Mobile. Analysts see revenue soaring 57% to $80.3 million, its healthiest year-over-year growth rate since late 2014. Wall Street pros are holding out for a small adjusted loss of $0.03 a share, a lot less red ink than it was leaking a year earlier.

Glu Mobile's renaissance this year stems largely from the success of Design Home, an interior decorator-themed casual game that was part of its $45.5 million deal for Covet Fashion publisher Crowdstar late last year. The game's success has resulted in Glu Mobile jacking up its gross bookings forecast for all of 2017 from between $215 million and $225 million to $307 million-$312 million in just six months.

Glu Mobile knows that it's hard to keep players engaged. It experienced a short-lived spike in revenue three years ago when Kim Kardashian: Hollywood raced up the app marketplace charts, but this is also the same company that posted six consecutive quarters of declining revenue until turning things around this year.

The sustainability of Design Home's success will be at the forefront of Wednesday afternoon's results and subsequent earnings call, but Glu Mobile also has a promising catalyst to talk up in The Swift Life. The success of Kim Kardashian: Hollywood opened the door for Glu Mobile to broker similar deals with other popular celebrities, but most of the releases to date have been knock-offs of the original Kardashian celebrity simulator. The Swift Life, in partnership with Taylor Swift, is more of a social app experience as fans can interact with one another as Swift's camp adds new weekly content to the platform.

The Swift Life is scheduled to roll out later this year, but with Swift's new album coming out at the end of next week it wouldn't be a surprise if the app is introduced to coincide with the record's release. Glu Mobile could have some positive things to say about the upcoming app, making sure that it continues to be one of this year's biggest winners.

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