Back in April this year, mobile and tablet games developer Glu Mobile Inc. (NASDAQ:GLUU) had hit as much as $11.75 a share; however, since then, GLUU stock has nosedived due to a drop in sales.
No Profit Since 2014
The company’s revenue is highly dependent on three titles, which contribute as much as 75% to its revenue. That means even a slight drop off can have a profound effect on GLUU stock. However, it is interesting to explore whether Glu Mobile will be able to make a comeback next year.
The first thing to mention with regards to Glu Mobile is the fact that the company is not profitable at this point. 2014 was the last time the company had turned a profit. Until September this year, marketing and sales-related expenses made up 36.5% of its top line.
It is clear that the company is more focused on growth right now as opposed to turning a profit. While such a strategy can often be welcomed by the market, any slowdown in growth can lead to a rapid nosedive in the stock price as well. The company has already reduced its full-year bookings projections to $405 million from $450 million.
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GLUU stock is up 1% at $5.90 in Friday’s trading session.
What’s in the Pipeline for 2020?
One thing that the market will look forward to in 2020 is whether Glu Mobile releases new titles or not. Analysts believe that a raft of new games could help revitalize the company considerably.
On the other hand, it should be pointed out that the price to earnings ratio of Glu stock is 1.67, which is lower than peers like Electronic Arts (NASDAQ:EA) and Activision Blizzard (NASDAQ:ATVI). Although it is true that there is nothing particularly compelling about GLUU stock, it should be noted that it has a clear path to growth in the future and could prove to be a very interesting watch for investors next year.
What do you think?
Featured image: DepositPhotos © cupertino
