Please ensure Javascript is enabled for purposes of website accessibility

Why Glu Mobile, Inc. Stock Fell 16.8% in July

By Keith Noonan - Updated Aug 3, 2018 at 7:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The mobile gaming company's stock dipped double digits last month but has bounced back thanks to better-than-expected earnings results.

What happened

Shares of Glu Mobile Inc. (GLUU) stock dipped 16.8 % in July, according to data provided S&P Global Market Intelligence . Sell-offs hit the technology sector late last month on the heels of earnings reports from Facebook and Twitter that fell short of the market's expectations.

GLUU Chart

GLUU price change July. Data source: YCharts.

Facebook posted second-quarter earnings on July 25, and Twitter followed up with its own second-quarter report a day later. The market flinched as both companies delivered engagement metrics that evidenced slowing growth and prompted investors to reevaluate whether tech stocks at large might be overvalued. 

A young woman holding her mobile phone and smiling.

Image source: Getty Images.

So what

Glu Mobile is a company that's in the middle of a turnaround effort, has posted big stock gains in 2018, and was trading at roughly 27 times forward earnings at the beginning of last month. Those characteristics likely primed the stock to see large sell-offs amid heightened concerns that the tech stock could be overheated. However, shareholders didn't have to wait too long to see some relief.

Now what

Glu stock climbed following the publication of its second-quarter results after market close on July 31 and are up roughly 15% so far in the current month as of this writing.

GLUU Price Chart

GLUU price change August. Data source: YCharts.

Sales for the June-ended quarter rose 31% year over year to reach $90.2 million, and bookings increased 20% year over year to land at $99.4 million. The company also raised its full-year sales guidance by roughly $11 million at the midpoint, and now expects revenue between $374 million and $378 million.

Glu is moving away from licensed titles built around celebrity brands in favor of building up its own intellectual properties. So far, it's making good progress on that front -- with games like Design Home, Covet Fashion, and MLB Tap Sports Baseball 2018 putting up strong performance. The flip side is that it's difficult to tell how long these franchises will continue to post good numbers and whether the company will succeed at introducing hit new properties, as the mobile games industry is fickle and highly competitive.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Glu Mobile Stock Quote
Glu Mobile

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.