Gluu Scales New 52-Week High: What's Driving The Stock?

Share price of Gluu Mobile Inc. (NASDAQ:GLUU) increased 3.8% to a new 52-week high of $4.33 and closed at the same price on Oct 13.

Notably, shares of Gluu have gained 114.4% over the last one year, substantially outperforming the industry’s 32.6% rally. The outperformance can be attributed to strong adoption of the company’s gaming portfolio.

Moreover, we believe the announcement of the company’s new “digital-entertainment project” in partnership with Grammy Award winning pop star Taylor Swift is also positive.

Currently, Gluu carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

The company has a market capital of $514.6 million and a long-term expected earnings growth rate of 15%.

Diversified Game Portfolio

Glu Mobile’s roster of games, especially its evergreen titles like Cooking Dash, Racing Rivals and Kim Kardashian: Hollywood have been primarily driving growth. Notably, the company’s revenues have beaten the Zacks Consensus Estimate in the past two quarters.

The company’s celebrity titles Kim Kardashian: Hollywood and Restaurant Dash: Gordon Ramsay also garnered considerable success. The former recorded $40 million in sales in the first three months, while the latter has generated $30 million so far.

However, the other titles such as Katy Perry Pop, Britney Spears: American Dream and Nicki Minaj have fallen short of expectations. To add to it, the company has been incurring losses.

Therefore, the company’s latest shift toward creating a social networking app called The Swift Line for the popular pop star is prudent in our view. The app, which is set for launch later this year, will enable the company to gain the support of the wide fan base of the singer.

Nick Earl, President & CEO of Gluu, believes that the company will be able to create a “deeply social environment” by connecting Taylor’s fans with her for an interactive communication session.

Reportedly, the app will be updated with the singer’s latest songs every week. The usage of Taylor special emojis, Taymojis, in conversations will also help them express their views freely. We believe this will enable the company to witness a rise in user engagement and thereby drive growth.

However, rising competition from established players like Electronic Arts (NASDAQ:EA) , Take-Two (NASDAQ:TTWO) and Activision Blizzard (NASDAQ:ATVI) remains a concern.

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