Please ensure Javascript is enabled for purposes of website accessibility

How Glu Mobile Shares Rose 42% Last Month

By Anders Bylund - Updated Mar 5, 2021 at 8:23AM

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

Video gaming giant EA is buying the company in an all-cash deal with a generous buyout premium.

What happened

Shares of Glu Mobile (GLUU) gained 41.7% in February, according to data from S&P Global Market Intelligence. The big gains rested on one simple event: Video games veteran Electronic Arts (EA 3.30%) decided to buy the company behind mobile hit games like Kim Kardashian: Hollywood, Disney Sorcerer's Arena, and Covet Fashion.

So what

Glu shares soared 35% higher on Feb. 9, the day after EA announced the all-cash buyout deal at an implied enterprise value of $2.1 billion. EA expects Glu to pull its weight by generating significant sales and positive operating profits right away. The acquisition should close in the second calendar quarter of 2021, after going through the usual gauntlet of regulatory reviews and shareholder votes.

"As part of Electronic Arts, we will continue capitalizing on the opportunities ahead in the expanding mobile gaming industry," Glu CEO Nick Earl said in the press release.

Two young people, all smiles and fist-pumps, enjoy a game on a shared smartphone.

Image source: Getty Images.

Now what

Glu is going out on a high note, joining EA in exchange for a generous buyout premium. If you'd invested $10,000 in Glu Mobile three years ago, it would be worth $32,700 at today's prices. The deal is unlikely to run into significant challenges before closing, growing EA's mobile gaming business roughly 70% larger in one fell swoop.

This is the end of the road for Glu's investors. Share prices are glued to the proposed price tag of $12.50 per share, leaving no room for arbitrage investments. If you already own Glu shares, you might as well just bite the bullet and cash in your stubs so you can reinvest your winnings in stocks that can continue to grow over time. Time is money, after all.

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
GLUU
Electronic Arts Inc. Stock Quote
Electronic Arts Inc.
EA
$124.94 (3.30%) $3.99

*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
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

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.