Shares of gaming company Glu Mobile (GLUU) have declined 21% this month. So what’s driven this fall in Glu’s stock price? Glu Mobile stock fell 18% on May 7, 2019 after the company announced its first-quarter results.
Glu reported revenue of $95.9 million in the first quarter of 2019, a rise of 18% year-over-year. Bookings—which is an important metric to gauge future revenue—rose 7% to $92.6 million in the first quarter. Around 74% of bookings came from royalty-free Glu IP titles while ad bookings accounted for 13% of total bookings.
Glu Mobile also met analysts’ earnings estimates of $0.05 in the first quarter.
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Robust gaming portfolio
Glu’s bookings were driven by three popular gaming titles. Design Home bookings rose 23% to $42.2 million in the first quarter. Covet Fashion bookings rose 38% to $16.8 million while the Tap Sports Baseball franchise saw bookings rise 49% to $13.4 million. Bookings from Tap Sports Baseball 2019 were included only for five days as the game launched on March 27.
Glu Mobile’s CFO Eric Ludwig stated, “The baseball studio team did an outstanding job in maintaining a large user base in the 2018 version and converting them to the 2019 version without having to reacquire the users.”
The total growth in bookings for Design Home, Covet Fashion, and Tap Sports Baseball rose 30% year-over-year and accounted for 78% of total bookings in the first quarter, up from 64% in the same period last year. This growth remains consistent with Glu Mobile’s strategy that aims to build a business model on titles with robust bookings growth.
So why did Glu Mobile stock fall despite impressive quarterly results?
Glu Mobile estimated bookings of $101 million for the second quarter. Analysts weren’t impressed as they estimated bookings to reach $107 million, which sent the stock lower on May 7.