Is this mobile game maker a B-list player?

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.

 

 

2. Electronic Arts Inc. ( EA): Develops, markets, publishes, and distributes game software and content for video game consoles, personal computers, mobile phones, tablets and electronic readers, hand held game players, and the Internet. Market cap at $8.64B, most recent closing price at $27.96.

 

 

3. Glu Mobile, Inc. ( GLUU): Engages in the design, marketing, and sale of casual and traditional mobile games worldwide. Market cap at $340.48M, most recent closing price at $4.76.

 

 

4. Take-Two Interactive Software Inc. ( TTWO): Develops, and distributes interactive entertainment software, hardware, and accessories worldwide. Market cap at $1.93B, most recent closing price at $19.61.

 

 

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

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