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Roth Capital Unfazed as Glu Mobile Inc. (GLUU) Restructuring Game Plan Puts Power in Hands of Studio and Development Teams

Exit of CTO Tim Wilson Part of the Restructuring Plan Says Aftahi


Glu Mobile Inc. (NASDAQ:GLUU) is undergoing a major overhaul, as the company downsizes its work force by 46 employees, abandons its worldwide launch of Car Town Racing (CTR), closes the San Francisco office,  and sees Chief Technology Officer Tim Wilson make an exit. Instead, the mobile game maker is handing over the reigns to its studio and game development teams.

Having already taken the restructuring charges of $1.5 million to $1.75 million into account, analyst Darren Aftahi of Roth Capital remains unfazed by the shakeup. Expecting a ripple effect into the third and possibly fourth quarter, Aftahi believes “these costs have already been accounted for in guidance and our model, leaving our estimates unchanged.”

As such, Aftahi reiterates a Buy rating on GLUU stock with a $4.00 price target representing a near 18% rise over current trading levels. (To watch Aftahi’s track record, click here)

The analyst writes, “As part of the restructuring plan, GLUU will reduce its workforce by 46 positions, including 22 from central technology and Android development/ quality assurance organization and 24 from the Car Town Racing game development team. In addition to the elimination of the Car Town Racing staff at its San Francisco office, GLUU has decided not to launch CTR worldwide, which had been in beta in numerous countries but had underperformed management’s expectations. Furthermore, in an attempt to centralize its studio and development structure, GLUU plans to move part of its technology division, including QA, porting and audio under the supervision of its COO and CRO. We believe these moves correspond with GLUU’s decision to let go of Tim Wilson, its Chief Technology Officer, as part of the restructuring plan.”

The analyst additionally highlights that yesterday’s album announcement from Taylor Swift paves the way for an eventual launch of the company’s Taylor Swift game- one that should align with the launch of the new album. For Aftahi, this will offer a “significant marketing platform for the game to piggyback off of,” making him all the more bullish on this mobile game maker. “Given games need time to incubate in beta, we expect a beta launch of the game in the very near future,” the analyst contends. 

TipRanks analytics demonstrates GLUU as a Buy. Of 5 analysts polled by TipRanks over the past 3 months, 3 are bullish and 2 are sidelined on Glue Mobile stock. The 12-month average price target stands at $3.45 representing a potential 1% upside over current trading levels.