Roth Believes In Glu Mobiles Celebrity Gaming Platform, Initiates With Buy Rating

• The share price of Glu Mobile Inc. GLUU has declined 52.2 percent over the last six months, touching a low of $3.125 on November 9.
• Roth Capital’s Darren Aftahi has initiated coverage of the company with a Buy rating and a price target of $5.
• Aftahi believes that the current stock valuation offers an attractive entry point, given the various catalysts in the near term and the limited downside risk.

Analyst Darren Aftahi expressed optimism regarding “1) the impending launch of Katy Perry Pop, 2) additional celebrity portfolio launches, 3) ’16 distribution of Tencent’s WeFire outside of Asia-Pac, and 4) a high degree of visibility into ‘16 game pipeline.”

Aftahi believes that there is meaning opportunity in the celebrity gaming platform, Katy Perry Pop, especially given Tencent’s investment of $125 million, which “opens the door” to a huge new audience.

Glu Mobile’s previous celebrity based game, Kim Kardashian: Hollywood, showed that the combination of celebrities engaged on social media and the right gaming engine could lead to a “meaningful, long-tailed revenue stream that is differentiated.”

The visibility into the company’s game pipeline for 2016 is high. The pipeline includes the launch of three new celebrity games, two titles that have been pushed out from 4Q, Tencent’s WeFire in the West being launched, as well as a new game in the resource management genre.

Although the “disappointing” 4Q guidance has adversely affected the stock, Aftahi believes that similar to “recent periods such as September 2013, June 2014 and early 2015,” this too is among the “high return, attractive long entry points.”