A Proxy For Online Gambling

Good morning!  Today’s stock is one we have featured before but there has been some recent news that makes it worth bringing to your attention again.

Glu Mobile, Inc. (NASAQ – GLUU - $2.75) is a small cap player in the gaming industry that has developed such original games with its own intellectual property such as Big Time Gangsta, Blood & Glory, Bug Village, Contract Killer, Contract Killer: Zombies, Eternity Warriors, Frontline Commando, Gun Bros, Men vs. Machines, Stardom: The A-List, Super K.O. Boxing and Toyshop Adventures. Additionally, the company has developed licensed games such as Build-a-lot, Call of Duty, Deer Hunter, DJ Hero, Guitar Hero, Family Feud, Family Guy, Lord of the Rings, Paperboy, The Price Is Right, Transformers, Who Wants to Be a Millionaire?, and World Series of Poker. The company offers products and games on all platforms from smartphones to tablets through direct-to-consumer storefronts and wireless carriers and distributors.

GLUU hit a high of $5.90 last July and then slowly plummeted the rest of the summer into fall hitting a bottom of $2.26 in early November.  A couple of bad earnings reports really hammered the stock, along with the Facebook debacle and inaccurate buyout rumors.  On Tuesday March 11^th, the company announced that its recent deal with Probability, a London based gambling service, will offer real-money slot games featuring Glu’s game Samurai vs. Zombies Defense.  The stock shot up over 18%.

The company is betting on relaxed restrictions and additional markets and hoping that these gaming products already in place can be marketed if and when online gambling is legalized in the US.  The company increased revenue in 4Q12 by 4%, predominately by a dramatic increase in smartphone applications.  The company continues to promise and deliver on new games launching 5 new ones in 4Q12 as well.

Glu Mobile, Inc. is operating with no debt per the FY12 report.  This is a great sign for a company that continues to release new products.  The charts are very bullish in the short term, particularly in our two favorites EMA and MACD analysis.  We think the stock climbs past $4.00 in short order.  Moreover, we believe GLUU can serve as a proxy for online gambling.  Therefore, as deregulation of online gambling occurs in various markets and states across the globes and the country, GLUU will likely rise in response.

Have a great day! 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours. 

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