$GLUU Why Venture Capital And Insiders Are Buying Glu

New Post Public Reply Private Reply Replies (0) Message Board

Jan 28, 2013 at 9:33 AM

$GLUU

[b]Why Venture Capital And Insiders Are Buying Glu Mobile[/b]

http://seekingalpha.com/article/1136951-why-v...e_readmore

Conclusion

In just two weeks, Glu Mobile will report 2012 full year financial results on February 5. Guidance is for revenues of $87.4 million (an 80% year over year increase in smartphone revenue) with a year ending balance sheet of $21.5 million in cash and no debt. Going forward, the company is also planning to guide for quarter over quarter adjusted EBITDA improvement in Q1 2013 from Q4 2012. More importantly, we expect to hear forward guidance about Glu's 2013 retooled game road map which includes the integration of recent acquisition Gamespy into more games and the integration and vision of recent hire, Matt Ricchetti as the President of Studios. Risks going forward would include Glu's ability to release profitable games in 2013 with high monetization rates unlike the weak Q3 2012 releases where 9 of 11 games were deemed failures. Gamespy and Ricchetti's experience in monetization should improve new game release prospects in 2013.

Without the ability to predict the future, we have been given many recent clues as to what Glu's funders and leadership expect for Glu in 2013. The CEO, three directors and venture capitalists are investing heavily in the $2.25 - $3.24 range with large insider buys before the February 5 earnings conference call. Clearly, these individuals and institutions who know the company the best consider the stock extremely undervalued. With a current share price of $2.30, investors can follow the lead of insider venture capital and buy at a 25% discount to Hany Nada's 3,243,218 share purchases ($3.05/average) just over 100 days ago.

One can also speculate that GGV and Hany Nada have reinvested back in Glu because they expect the company could be a potential takeover target just as other Nada-led investments have been as referenced earlier. For years, Nada has anticipated M&A and consolidation in the gaming sector as evidenced by his remarks to the Silicon Valley Business Journal and 2013 may be that moment for Glu:

"You don't need 65 mobile game companies," he says. "You maybe need 10. The problem is there are so many ways to deliver the games ... You'll see a lot of game companies because of that. But over time they shrink and that is happening right now. There are a lot of consolidations right now. And as M&A goes on, you'll continue to see a consolidation in the marketplace."

With the revenue multiple range of 4X-20X for GGV/Nada funded companies acquired in M&A, prudent observers notice this great track record of identifying, funding, and exiting at top values. If Glu followed this path and received only a conservative 4X multiple (on 2012 revenues of $87 million), Glu could be acquired at $348 million or $5.04/share based on 69 million shares outstanding. Under that scenario, investors buying now (in the $2.25-$2.30 range that the CEO and directors just paid) would realize a 118% gain.

My plan is to hold my large GLUU position (added to most recently at $2.29) and watch for Nada's exit value to be reached via acquisition or share price appreciation. With his great track record, history tells me Glu Mobile will not remain at this low $150 million market cap for very long or even the $200 million market cap ($3.00/share) where Nada was comfortable reinvesting again in Glu. Thanks to required public filings by Hany Nada as a GLUU insider, I'll be watching every move he makes and so should you.

Glu Mobile offers a great risk/reward profile going into 2013. The downside should be at the 2-year support lows of $2.00 (-13%) while the upside is $5.00 (+118%).

Newer

Older

Scroll down for more posts ▼

Top 10 Most Recent News Articles

Patented Foodservice Firm's $1.6M Sale: High ROI Potential

Cooking Up High Margins and Rapid Growth You don’t stumble on opportunities like this every day. A foodservice company out there is posting some mouth-watering numbers, and it’s shaking up the M&A scene. This one’s got patents holding up its brand like a culinary force field, and it’s now on the auction block for a cool $1.6 million. And the numbers? Well, they...

Softcare Facilitates Standards Delegation Visit to Senegal

Ever seen a whole nation's hygiene industry getting a deep dive from not just one, but three major standards bodies? That's what just went down in Senegal. Softcare opened its doors wide to folks from the Senegalese Association for Standardization (ASN), the International Organization for Standardization (ISO), and the Swedish Institute for Standards (SIS). This was no...

viaim's AI Earbuds Snag IFA Awards, Launch On Indiegogo

When the tech cosmos hands you two hefty IFA Innovation Awards, you know you’re onto something. viaim’s Rise wasn't just about slick marketing—it brought home the 'Best in Audio' and 'Best in Design' titles from IFA 2026, proving these earbuds are more than just another gadget. Key Innovations Behind the Accolades IFA is no small affair—it's a major tech trade...

Local Climate Resilience Gains Urgency in the Southwest

Local Impact Means Taking Climate Change Personally If you haven't felt it yet, you will. Climate change isn't just a global headline anymore—it's a daily reality that’s reshaping life where you stand. David W. DuBois, New Mexico's top climatologist, is sounding the alarm this time on the new Net Zero Speaks episode, saying it's on us to use local climate knowledge to...

Court Enforces Design Rights: AEKE Blocked in Germany

Court's Verdict: A Lesson in Design Protection Right out the gate, the Cologne Regional Court didn't pull any punches. Speediance got their 'Gym Monster' design yanked from under AEKE over in Germany. Legal swords were drawn after Speediance spotted AEKE's fitness gear looking a bit too familiar at the FIBO trade fair. Somebody should've told AEKE that a tapped shoulder...

CHiQ Secures AI Award, Elevates Smart Home Living

CHiQ's Big Win in the AI Game In a world where technology rarely stops spinning, CHiQ has carved its own commendable niche. Snagging the AI Home Ecosystem Brand Award at IFA 2026 in Berlin, the brand's knack for pioneering AI tech isn't just a footnote—it's the whole story. The award—enough to make your competitors green with envy—highlights how far they've come in...

PrimeBOT Shines at IFA 2026 with Innovative Awards

A New Chapter in Home Robotics In today's tech-centric world, newcomers often confuse flash with substance. But every now and then, you catch a glimpse of something that might just change how the world spins. At this year's IFA 2026, PrimeBOT didn't just dip its toes into the limelight—it cannonballed right in, drumming up some serious buzz with its PrimeBOT T1 and...

Midea's SpaceMaster Oven: Revolutionizing Home Pizza

Oven Culture: Beyond Simple Baking When it comes to the kitchen, we're always promised more than we get. You know the spiel: the heart of the home, a place for traditions. But honestly? Most ovens are about as exciting as watching paint dry. Often too cramped, uneven, and a pain in the backside to preheat. But then, out of the burning blue, Midea comes along with their...

Evolve & ELITEWHEELS: Shifting Gears in European Cycling

Revving Up for the European Cycling Scene There's something about the open road and the whirr of wheels that gets blood pumping—maybe it's the competition, maybe it's the gear. Either way, this year's Italian Bike Festival is turning the Misano World Circuit into a battleground for cycling's elite, with evolve and ELITEWHEELS charging at the forefront. They're not just...

Penetron Strengthens Midwest, Central USA Support Team

Expansion of Penetron's Engineering Support Eyes are on the Midwest and Central USA as Penetron makes a strategic move to bolster their technical support dream team. They've snagged Sean Allison, a heavyweight with more than three decades' worth of grit and know-how from the construction battlefield. Sean, now stationed in the heart of America's Dairyland—Green Bay,...