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Can Glu Mobile Stock Bounce Back After Last Week's 19% Drop?

By Rick Munarriz - Dec 24, 2017 at 10:00AM

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The mobile gaming company slumps after a quick fade of its its ballyhooed Taylor Swift app.

One of last week's biggest losers was Glu Mobile (GLUU), sliding 18.7% after its highly anticipated app The Swift Life was released earlier this month. The stock had run up in anticipation of the official Taylor Swift application, hitting a new two-year high the day before its Dec. 15 App Store release. 

A little selling on the news isn't necessarily a surprise, especially for a stock that had more than doubled in 2017 by the time of the app's official release. It also didn't help that a bit of controversy broke out last week, as The Daily Beast and others pointed out how political debates were breaking out on The Swift Life's social platform. 

The Swift Life's popularity itself started to wane quickly after its launch. Smartphone tracker AppAnnie had it as the fifth most downloaded iOS app in the domestic social-networking category in its first two days of availability, falling all the way to 76 in social networking and 1,448 overall by this weekend.

The Swift Life ad with Taylor Swift posing with her arms wrapped around her head.

Image source: Glu Mobile. 

Shake it off

A decline in an app's daily download activity after a hyped launch is natural, especially in this case, with Swift fans well aware of The Swift Life's release. The good news is that the number of downloads is incremental, so the user base is growing unless it's failing on the engagement front. We'll find out if that's the case in the coming quarters.

It's still a bit of a letdown for a social gaming company that lives and dies by the impact of its newer applications to dip in download activity so quickly. Glu Mobile has established a large catalog of active programs, but more than half of its bookings in its latest quarter came from just two apps -- Design Home and Tap Sports Baseball 2017

Design Home has been a big part of this year's success, with Glu Mobile boosting its guidance every single quarter this year, going from targeting between $215 million and $225 million to $312.2 million and $314.2 million in nine months. 

Analysts generally like Glu Mobile these days. The app publisher that turned heads with the breakout success of Kim Kardashian: Hollywood three years ago is entering a new niche now, given the social networking angle of The Swift Life

Glu Mobile needs a new hit. Revenue and bookings soared 58% and 67%, respectively, in its latest quarter, but monthly active users have declined sequentially for three consecutive quarters. Glu Mobile's next quarterly report and the 2018 guidance that it should initiate will dictate if the stock can duplicate this year's success in the year ahead. 

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