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Why Glu Mobile Stock Remains Volatile


May. 23 2019, Published 8:03 a.m. ET

Stock fell 4.8% on May 22

The stock of mobile gaming company Glu Mobile (GLUU) fell 4.8% on May 22 to close trading at $8.43 per share. The stock has been volatile this month. It lost almost 18% on May 7 after the company announced first-quarter results.

Glu Mobile stock then rose 6% between May 14 and May 16 before losing around 8% in the last week. Despite Glu Mobile’s recent weakness, the stock is still up 4.5% this year. So what does this mean for investors? Is Glu Mobile stock trading at an attractive valuation?

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PE ratio

Wall Street estimates Glu Mobile’s EPS to rise 14.3% in 2019 and by 47% in 2020. The EPS growth is estimated at a compound annual growth rate of 15% in the next five years.

In comparison, its revenue is estimated to rise by 18.2% annually over the next three years. The stock has a forward PE ratio of 18x, which doesn’t seem expensive considering the company’s growth estimates.

Gaming portfolio

Glu Mobile is set to benefit as the global gaming segment continues to grow by double digits. Glu has a robust gaming portfolio and is banking on games such as Design HomeCovet Fashion, and the TSB franchise to drive sales.

If any of the new upcoming releases become a hit among gamers, it could drive revenue as well as the bottom line higher for Glu Mobile going forward.

What does Wall Street think?

Out of the six analysts tracking Glu, four have recommended a “buy,” and two have recommended a “hold” for the stock. There are no “sell” recommendations for Glu. The analysts have a 12-month price target estimate of $11.51 for Glu, which is 36.5% higher compared to its current price.


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