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Is this mobile game maker a B-list player?

Stocks in this article: TTWO GLUU EA ATVI

By Chris Lau for Kapitall.

Anyone who did not hear of the hit game, Kim Kardashian: Hollywood, would have missed the rally in Glu Mobile (GLUU). When Glu reported quarterly results, it factored slowing demand for the popular game over the next few months. The firm also made a big acquisition. With the stock peaking at $7.60 and dropping to a recent price of $5.72, the company is worth another look.

Glu boosted its revenue and earnings guidance. The firm still guided conservatively, because it factored in falling rankings for its Kim Kardashian game. The game maker continues to innovate, by improving the gaming experience with each revision.

Still, Glu is diversifying its reliance on hit releases, by developing a broader range of games across different genres.

Acquisition

Despite the higher quarterly guidance, Glu announced it was buying Cie Games for $100 million. Glu will pay for the acquisition with $70 million in stock, taking advantage of the appreciation in its share price. Just weeks ago, the stock traded at $3.50. Cie Games will add Racing Rivals to Glu’s title list.

Alternative investments

There are not many pure play game makers on the market. Investors could look at Electronic Arts (EA), Activision (ATVI) or Take-Two Interactive (TTWO). Of the three options, EA offers investors exposure to mobile games. Revenue from this channel is growing for EA, but the bulk of earnings still come from console and PC game sales.

 

Click on the interactive chart to view data over time. 

 

1. Activision Blizzard, Inc. ( ATVI): Activision Blizzard, Inc. publishes online, personal computer (PC), console, handheld, and mobile games of interactive entertainment worldwide. Market cap at $14.67B, most recent closing price at $19.69.

 

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