What happened

Shares of Glu Mobile (NASDAQ:GLUU) gained 20.7% in January, according to data from S&P Global Market Intelligence. Recovery for the broader market early in 2019 and some encouraging analyst coverage propelled Glu stock to a 10-year high.

GLUU Chart

GLUU data by YCharts

Roth Capital published research on Glu in early January that analyzed performance of the company's top games and reported that bookings were better than management's guidance and most tracking guidance suggested. 

A person using a mobile phone.

Image source: Getty Images.

So what

The video game company has posted fantastic performance over the last two years thanks to its successful pivot away from licensed games in favor of properties that it owns. Gaming industry stocks were hit hard in the late-2018 sell-off, but evidence of momentum for Glu's mobile product catalog helped the company's stock post gains of roughly 122% on the year. That run and continued gains in January made it one of the gaming industry's best-performing stocks; however, a lack of visibility into the company's upcoming lineup and uncertainty about whether its existing games will be able to increase player engagement raise questions about whether shares might be too richly valued compared to those of its more dependable industry peers. 

Now what

Glu stock has given up a bit of ground in February, with shares trading down roughly 4.5% in the month so far. 

GLUU Chart

GLUU data by YCharts

Glu stock fell after the company's fourth-quarter earnings release on Feb. 4 delivered a profit that fell short of the market's expectations. Sales for the period came in at $98.2 million, beating the average analyst estimate for revenue of $96.3 million. However, adjusted earnings per share were $0.03, missing the average analyst target for per-share earnings of $0.07.

Shares now trade at roughly 26.5 times this year's expected earnings and three times expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.