Glu Mobile Inc. (GLUU) shares began approximately 2% lower on Monday as traders grabbed gains from last week’s earnings run-up early in the trading day.
Morgan Stanley lowered Glu Mobile shares from Overweight to Equal Weight, but increased its price objective from $8.00 to $10.50 per share. Analyst Matthew Cost thinks that the market has fully recognized the company’s progress during the epidemic and that considerable margin improvement is built into the share price, which has more than quadrupled in recent weeks.
Revenue increased 11.9% to $107.3 million in the first quarter, above forecasts by $10.55 million, but net losses were $0.06 per share, one penny lower than expected. Bookings increased by a significantly higher-than-expected 15% during the quarter, and the business anticipates reaching $500 million by the end of the year.
Technically, Glu Mobile shares broke out from past highs and trendline resistance earlier this month, and the breakout was extended after the company’s first-quarter financial reports on Friday. With a value of 80.95, the relative strength index (RSI) has entered overbought territory, while the moving average convergence divergence (MACD) continues in a positive upswing. These signs indicate that the stock may see some consolidation.
Over the medium term, traders should look for some consolidation above Fibonacci support around $9.13 to trendline support at about $8.40. If the stock falls below those levels, traders may see a move toward the 200-day moving average at about $7.00, but given the current momentum, that scenario is doubtful. If the stock recovers, traders should aim for a rise over $10.70 to new highs.
Except via passively managed index funds, the author has no investment in the stock(s) mentioned.
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